In a significant move to bolster the adoption of digital tokens for transactions, PayPal Holdings Inc. (NASDAQ:PYPL) announced Monday the launch of a new U.S. dollar-denominated stablecoin.
Named PayPal USD (PYUSD), this digital currency is the brainchild of the San Jose-based financial giant and is set to be a game-changer in the realm of digital payments and the fintech world.
The digital coin, issued by Paxos Trust Co., is underpinned by U.S. dollar deposits, short-term Treasuries and other cash equivalents. Its value is anchored 1:1 to the dollar, and a phased rollout for U.S.-based PayPal users is on the horizon.
PayPal, which has seen a decline of over 35% in its shares over the past year, is fortifying its position in the digital payment landscape.
Dan Schulman, the company’s CEO, emphasized the need for a stable digital currency that can seamlessly integrate with traditional fiat currencies like the U.S. dollar.
“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 Schulman in a press statement. “Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
PayPal anticipates that PYUSD will initially find prominence in the crypto and Web3 domains, serving as a medium for trading various digital currencies and facilitating in-game transactions. Over time, its use is projected to expand into sectors such as remittances and small-scale payments, as Bloomberg reported.
With Tether USD controlling a significant majority (over two-thirds) of the stablecoin arena, Jose Fernandez da Ponte, who leads PayPal’s blockchain and digital currencies’ division, recently said there’s a growing appetite for a different stablecoin option given the market’s concentration.
Users can redeem PYUSD for dollars anytime and can also swap it for other cryptocurrencies on PayPal’s platform. The coin will soon be integrated into PayPal’s widely-used app, Venmo, allowing users to transfer their token holdings between PayPal and Venmo wallets. Furthermore, PYUSD can be transferred to compatible third-party wallets outside of PayPal’s ecosystem.
“Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves,” the firm said in a release. “Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets.”
Paxos Trust Company, the issuer of PYUSD, operates under the regulatory purview of the New York State Department of Financial Services. Additionally, PayPal secured a BitLicense from NYDFS in June 2022, further cementing its commitment to regulatory adherence.
Produced in association with Benzinga
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