In a landmark development, PayPal Holdings, Inc., a titan in the digital payments space, has taken the wraps off its own stablecoin pegged to the U.S. dollar, dubbed PayPal USD (PYUSD). This initiative marks PayPal’s strategic foray into the rapidly evolving universe of Web3 and digital-centric payments.
According to PayPal’s press release, the newly minted PYUSD is underpinned by a mix of assets, including U.S. dollar deposits and short-term U.S. Treasuries. Paxos Trust Company, the issuer of the stablecoin, guarantees a 1:1 exchange rate with the U.S. dollar. This venture is viewed as PayPal’s strategic response to the burgeoning role of stablecoins in the digital payments landscape.
In the weeks following the announcement, PayPal plans to roll out a suite of features for eligible U.S. customers. These features will enable PYUSD holders to shuttle the stablecoin between PayPal and compatible external wallets, make person-to-person payments, use PYUSD for purchases at checkout, and seamlessly convert between PYUSD and other cryptocurrencies supported by PayPal.
PayPal’s President and CEO, Dan Schulman, underscored the growing need for a stable, digital currency that can effortlessly interface with traditional fiat currencies like the U.S. dollar. Schulman expressed confidence in PayPal’s ability to drive the evolution of digital payments, given its commitment to responsible innovation and regulatory compliance.
The introduction of PayPal USD is designed to smooth out transactions in virtual environments, expedite the transfer of value, channel flows to developers and creators, and support the ongoing foray of major global brands into the digital asset space. As an ERC-20 token on the Ethereum blockchain, PayPal USD is set to unlock a plethora of opportunities for a burgeoning community of developers, wallets, and web3 applications.
PayPal USD is issued by Paxos Trust Company, a regulated entity under the New York State Department of Financial Services. The reserves backing PayPal USD, which consist of U.S. dollar deposits, U.S. Treasuries, and similar assets, can be traded via PayPal at a rate of $1.00 per PayPal USD.
From September 2023, Paxos plans to release a public monthly Reserve Report for PayPal USD, providing a detailed breakdown of the reserve composition. An independent third-party accounting firm will also issue a public attestation of the value of PayPal USD reserve assets, in line with standards set by the American Institute of Certified Public Accountants (AICPA).