PayPal has launched a U.S. dollar-denominated stablecoin, PayPal USD (PYUSD) with an objective to promote adoption of digital currencies for payments and transfers.
The stablecoin, known as PayPal USD, is backed by US dollar deposits and short-term US treasuries, and will be issued by Paxos Trust. PayPal’s shares rose 1.4% to US$63.66
“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. “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.”
The stablecoin which is referred to as PayPal USD Stablecoins are designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets by the largest brands in the world.
The launch of the stablecoin will enable eligible U.S. PayPal customers who purchase PayPal USD 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 checkout2 and convert any of PayPal’s supported cryptocurrencies to and from PayPal USD .
Fully-backed, regulated stablecoins have the potential to transform payments in web3 and digitally native environments.The PayPal USD will be available to consumers, merchants and developers to seamlessly connect fiat and digital currencies.
As the only stablecoin supported within the PayPal network, PayPal USD leverages PayPal’s decades-long experience in payments at scale, combined with the speed, cost and programmability of blockchain protocols.
The PayPal USD will be available to an already large and growing community of external developers, wallets and web3 applications, can be easily adopted by exchanges, and will be deployed to power experiences within the PayPal ecosystem.
Most of the current volume of stablecoins is used in web3-specific environments – PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo.
PayPal USD is issued by Paxos Trust Company, a fully licensed limited purpose trust company subject to regulatory oversight by the New York State Department of Financial Services. In June 2022, PayPal was issued a BitLicense by NYDFS after previously obtaining a conditional BitLicense.
Reserves for PayPal USD are fully backed by U.S. dollar deposits, U.S. Treasuries and similar cash equivalents, and PayPal USD can be bought or sold through PayPal at a rate of $1.00 per PayPal USD.
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).
In addition to building products and services that add utility to digital currencies, PayPal is focused on increasing consumer and merchant comprehension of cryptocurrencies, stablecoins and central bank digital currencies (CBDCs), while working closely with regulators as the industry evolves. In addition to offering PayPal USD for U.S. accountholders, PayPal currently offers customers the ability to buy, hold, sell and transfer select cryptocurrencies, and provides educational content to help accountholders understand the risks and possibilities surrounding the technology.