The evolution of the digital financial landscape has led to disruptive innovations that continue to transform the way we interact with money. In this context, PayPal has taken a bold step by announcing the launch of its own stablecoin, PYUSD, a digital currency pegged to the US dollar.
PayPal, one of the giants in the digital payment field, has introduced PYUSD, its own stablecoin linked to the dollar. This new digital currency aims to provide users with a more efficient and stable way to conduct transactions and store value in digital environments, while also contributing to the opportunity to use such digital assets.
As stated in its announcement,
“PayPal USDOpens in a new window is designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents. PayPal USD is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company. ” [1]
US customers of the platform will have the ability to purchase PYUSD. If they hold this currency in their accounts, they can transfer it between PayPal and compatible external wallets, send money between individuals, use it as a means of payment for purchases, and convert it to any of the other cryptocurrencies that PayPal supports, and vice versa.
It’s important to note that PYUSD is an ERC-20 token built on the Ethereum network and is additionally “backed by Paxos Trust, a fully licensed company subject to regulatory oversight by the New York State Department of Financial Services, responsible for issuing PYUSD.”[2]
According to PayPal, platform users in the United States will be the first to benefit from PYUSD and its functionalities, and it will soon also be available on the Venmo digital payment app. Additionally, it’s important to consider that PYUSD will be fully compatible with Web3 environments.
The stablecoin, which will be available in the coming weeks, will have several benefits for its users, and in essence, “is designed to reduce friction for payments in virtual environments, facilitate quick transfers of value, send remittances or make international payments, enable direct flows to developers and creators, and promote continued expansion in digital assets by the world’s largest brands.”[3]
With this move, PayPal aims to remain a leader in the financial market despite the ongoing digital disruption.
However, by issuing its own stablecoin, they must take into account that regulation and oversight become critical. This is why PayPal announced that “Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves. Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets. The attestation will be issued by an independent third-party accounting firm and conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA).”[4] This provides transparency and security both to its users and to authorities.
All of this is happening at a critical moment for cryptocurrency companies in the United States, where authorities have taken a strict approach, filing lawsuits against major players and thus questioning the future and certainty of this sector in the US.
With the launch of PYUSD, PayPal joins the growing group of players seeking to shape the future of digital finance. By offering a digital currency backed by the US dollar, PayPal is not only providing a reliable alternative for online transactions but also paving the way for broader adoption of cryptocurrencies and digital currencies in everyday life. The arrival of PYUSD highlights how financial innovation continues to evolve, providing faster, more secure, and accessible solutions in the digital world.
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[1] https://newsroom.paypal-corp.com/2023-08-07-PayPal-Launches-U-S-Dollar-Stablecoin
[2] https://www.diariobitcoin.com/stablecoin/paypal-lanza-su-propia-stablecoin-vinculada-al-dolar-pyusd/
[3] https://www.diariobitcoin.com/stablecoin/paypal-lanza-su-propia-stablecoin-vinculada-al-dolar-pyusd/
[4] https://newsroom.paypal-corp.com/2023-08-07-PayPal-Launches-U-S-Dollar-Stablecoin
