PayPal has launched a new US dollar stablecoin named PayPal USD, a digital asset fully backed by US dollar deposits, short-term US treasuries, and similar cash equivalents.
This move by PayPal is anticipated to contribute to the evolution of payments within the realm of web3 and digitally native ecosystems.
The logo of online payment company PayPal is pictured during LeWeb 2013 event in Saint-Denis near Paris on December 10, 2013.
PayPal USD Stablecoin
The aim of the PayPal USD stablecoin is to harness the potential of stablecoins for facilitating payments. Each unit of PayPal USD is redeemable 1:1 for US dollars. The issuance of this stablecoin is under the oversight of the Paxos Trust Company.
PayPal USD extends its utility to eligible US PayPal customers, enabling them to perform a range of actions, which include seamless transfers between PayPal and compatible external wallets, person-to-person payments utilizing PYUSD, funding purchases with PayPal USD at checkout, and converting supported cryptocurrencies to and from PayPal USD.
This strategic move aligns with the industry's shift towards digital currencies and addresses the demand for a stable instrument that integrates smoothly with both digital and fiat currencies.
Dan Schulman, PayPal's President and CEO, commented on this development, stating, "The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar."
PayPal USD targets to bridge the gap between traditional fiat currency and the emerging world of digital currencies, catering to consumers, merchants, and developers alike. It capitalizes on PayPal's extensive experience in large-scale payments while leveraging the advantages of blockchain protocols.
Operating as an ERC-20 token on the Ethereum blockchain, PayPal USD taps into the growing community of developers, wallets, and web3 applications. Its compatibility with existing ecosystems positions it for widespread adoption.
PayPal USD's impact extends to facilitating seamless in-experience payments in virtual environments, enabling swift value transfers for various purposes, fostering remittances and international payments, facilitating direct transactions to developers and creators, and supporting the expansion of digital assets among major global brands.
With compatibility within the web3-specific ecosystem and upcoming availability on Venmo, the influence of PayPal USD is set to grow.
Read Also: US Financial Agency Urges Users Against Storing Cash in Venmo, Paypal - Here's Why
PayPal USD Issued by Paxos Trust Company
To ensure transparency and compliance, PayPal USD is issued by Paxos Trust Company, which operates under the regulatory oversight of the New York State Department of Financial Services.
Commencing September 2023, Paxos is set to release a monthly Reserve Report for PayPal USD, offering insights into the makeup of the reserves. Furthermore, an external third-party attestation will accompany the PayPal USD reserve assets, following the American Institute of Certified Public Accountants (AICPA) guidelines.
PayPal's initiative is not just about product offerings but also about enhancing the understanding and adoption of digital currencies among consumers and merchants.
The company strives to provide educational resources and content to help users comprehend the intricacies, risks, and possibilities associated with cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs).
Related Article: PayPal Cuts 32% of Pay for Outgoing CEO Dan Schulman to Meet Financial Targets
