PayPal, the renowned digital payments company, has introduced a U.S. dollar stablecoin in the market — in a significant move towards advancing the adoption of digital currencies for payments and transfers.
The new stablecoin, aptly named “PayPal USD,” is designed to mitigate the wild price fluctuations that have often hindered the seamless usage of cryptocurrencies for day-to-day transactions and as a store of value. By backing the stablecoin with U.S. dollar deposits and short-term U.S. Treasuries, PayPal aims to ensure its value remains pegged to the dollar, making it a reliable and stable medium of exchange.
The digital payments company said eligible U.S. PayPal customers who purchase PayPal USD will be able to:
# Transfer PayPal USD between PayPal and compatible external wallets
# Send person-to-person payments using PYUSD
# Fund purchases with PayPal USD by selecting it at checkout
# Convert any of PayPal’s supported cryptocurrencies to and from PayPal USD
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” said Dan Schulman, president and CEO, PayPal.
PayPal has teamed up with Paxos Trust Co, a well-known blockchain infrastructure firm, to facilitate the issuance and management of the stablecoin. This partnership will enable the efficient and secure management of the stablecoin, giving PayPal customers in the United States access to a reliable digital currency option.
The introduction of PayPal USD comes at a crucial time when the adoption and regulatory frameworks for stablecoins are being closely scrutinized. Just last month, a U.S. congressional committee faced challenges reaching a consensus on a bill that aimed to establish a comprehensive federal regulatory framework for stablecoins.
Despite the regulatory uncertainties, major players in the financial industry are recognizing the potential of stablecoins. For instance, in 2021, Visa announced its decision to accept USD Coin (USDC) as a settlement option on its payment network, further highlighting the growing interest and acceptance of stablecoins in mainstream finance.
With PayPal’s entry into the stablecoin market, it is expected that the adoption of digital currencies for everyday transactions will receive a significant boost. By providing a stable and easily accessible digital currency option, PayPal aims to streamline the usage of cryptocurrencies and pave the way for more widespread acceptance and integration of blockchain-based assets in the global financial system.