PayPal announced the launch of the PayPal USD (PYUSD) stablecoin. The issuer is Paxos, an infrastructure company.
According to the release, the asset is fully backed by dollar-denominated deposits, short-term Treasuries and similar cash equivalents. PYUSD is pegged to the U.S. dollar at 1:1.
“PayPal USD is intended for digital payments and Web3, as well as for compatibility with the most widely used exchanges, wallets and applications,” the release said.
The company noted that the stablecoin has been available since August 7, 2023, and in the United States it will be rolled out in the coming weeks. Customers will:
- transfer PYUSD within the service and between external wallets;
- send payments to individuals;
- pay for purchases;
- convert to any of the supported cryptocurrencies.
“Transition to digital currencies requires a stable instrument that is both digital and easily connected to fiat currency such as the US dollar,” said the company’s CEO, Dan Schulman.
In the wake of PayPal’s announcement, emphasized the need for passage of a stablecoins law.
“This announcement is a signal that stablecoins, if issued under a clear regulatory framework, promise to become the backbone of our 21st-century payments system,” he wrote.
PayPal USD is built on the Ethereum blockchain under the ERC-20 standard. The firm believes that the stablecoin will simplify transfers and international payments, and will also aid the wider adoption of digital assets.
“Starting in September 2023, Paxos will publish a public monthly report on PayPal USD reserves,” PayPal added.
Rumors about plans for the payments giant to launch a stablecoin emerged in May 2021. At the time, one informed source suggested that PayPal was more likely to partner with a player already represented in the stablecoin space.
In February 2023, it was reported that the firm halted development of its own stablecoin amid news of the investigation NYDFS into Paxos’s activities, the issuer of BUSD and USDP.
Subsequently the infrastructure company reported that there had been constructive dialogue with the U.S. Securities and Exchange Commission, which warned of its intention to sue.