PYUSD, also known as PayPal USD, is backed by U.S. dollars deposit, short-term U.S. treasuries, and other cash equivalents. It can be redeemed for U.S. dollars at a 1:1 ratio
Payments giant PayPal (PYPL.O) said on Monday it has launched a U.S. dollar stablecoin (PYUSD), becoming the first major financial technology firm to embrace digital currencies for payments and transfers.
On Monday, PayPal (PYPL.O) announced the launch of a stablecoin for U.S. dollars. This move makes them the first major financial technology company to adopt digital currencies for payments and transfers.
PayPal’s announcement on Monday boosted its shares by 2.66%. The announcement is a clear indication of confidence in the cryptocurrency industry, which has faced numerous challenges over the past year, including regulatory hurdles and notable failures.
PayPal USD (PYUSD) is intended to enhance the potential of stablecoins for payment purposes and is fully supported by U.S. dollar deposits, short-term U.S. Treasuries, and comparable cash equivalents. It is redeemable on a 1:1 basis for U.S. dollars and is issued by Paxos Trust Company.
Beginning on August 7th, 2023 and continuing over the next few weeks, qualifying PayPal customers in the United States who acquire PayPal USD (PYUSD) will have the ability to perform the following actions:
• Move PayPal USD (PYUSD) between their PayPal account and external wallets that are compatible
• Send money to other individuals using PYUSD
• Use PayPal USD (PYUSD) to pay for purchases by selecting it at checkout2
• Convert any of the cryptocurrencies supported by PayPal to and from PayPal USD (PYUSD).
What are Stablecoins?
Stablecoins are a type of crypto token that are pegged to a stable asset to prevent sudden and extreme price fluctuations. Despite being in existence for several years, they have not gained much popularity in the mainstream consumer payment system.
Instead, people tend to use stablecoins for trading other cryptocurrencies such as bitcoin and ether. The biggest stablecoin in the world is Tether, while the second largest is USD Coin, which is issued by Circle – a cryptocurrency provider.
US Regulations on Stablecoins
A bill to establish a federal regulatory framework for stablecoins was advanced by the U.S. House Financial Services Committee last month. This bill will focus on the registration and approval process for stablecoin issuers.
In a statement released on Monday, Representative Patrick McHenry, who chairs the committee as a Republican, expressed his opinion that PayPal’s announcement is a sign that stablecoins have a promising future as a pillar of our modern payments system.
He further stated that America is at a critical juncture in its digital asset innovation, and Congress is taking significant bipartisan steps to ensure that the U.S. remains a leader in the financial sector of the future.
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