PayPal Launches USD-Backed Stablecoin

PayPal has introduced a stablecoin denominated in US dollars, tailored for digital transactions and Web3 applications, reports Finextra. The stablecoin, known as PayPal USD (PYUSD), is fully backed by deposits in US dollars, short-term US treasuries, and comparable cash equivalents. It maintains a 1:1 redemption ratio with US dollars.

Gradually rolling out in the upcoming weeks, eligible US-based PayPal customers who acquire PayPal USD will gain the ability to transfer the token to external wallets, engage in peer-to-peer payments, support purchases at PayPal-enabled checkouts, and facilitate conversions between cryptocurrency holdings and PayPal USD.

Dan Schulman, PayPal's President and CEO, emphasizes the necessity for a stable digital instrument that can seamlessly bridge the gap between digital currencies and traditional fiat like the US dollar. He highlights PayPal's commitment to responsible innovation and compliance as the underpinning for their contribution to the expansion of digital payments through PayPal USD.

While the majority of current stablecoin usage revolves around web3-specific contexts, the strong global brand recognition of PayPal is poised to propel this innovative payment asset into mainstream adoption. Schulman asserts that PayPal USD will seamlessly integrate with the Web3 ecosystem right from its launch and will soon become available on Venmo.

Functioning as an ERC-20 token built on the Ethereum blockchain, PayPal USD is under the management of Paxos Trust Company. Paxos aims to establish trust in the stablecoin by regularly publishing a public Reserve Report for PayPal USD, detailing the composition of its reserves. Additionally, Paxos will provide a third-party attestation of the value of the reserve assets backing PayPal USD.