- Paxos described the launch as a “watershed moment.”
- PYPL stock surged 2% following the announcement.
Payments giant PayPal (NASDAQ: PYPL) has officially announced its stablecoin PayPal USD (PYUSD). However, it is yet to go live. According to the press release, the stablecoin will be available on the payments platform in the coming weeks. It already supports cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and more.
Paxos to Issue PayPal USD
The release mentions USD backs its stablecoin and Paxos Trust Company, a fintech organization, will issue it. Paxos has its own stablecoin namely Pax Dollar (USDP). The company describes the launch as a “watershed moment” in context with regulations in the stablecoin sector. In 2020 PayPal Ventures, PayPal’s venture arm, participated in a series C funding for Paxos.
Stablecoins holds the potential to transform web3 space, says the announcement. Web3 users dominate stablecoin activity. Primarily, they hold them to step aside from volatility in the market. Cryptocurrencies are constantly fluctuating between extreme highs and lows. Many digital assets are trading way lower than their November 2021 price.
Dan Schulman, PayPal CEO, says, “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.” However, cryptocurrencies are yet to go mainstream. Regulators across the globe are still assessing financial risks associated with these assets.
PYUSD is an ERC-20 token persisting on Ethereum blockchain. Given the prominence of PayPal, activity on the network could see a boost. As of 2021, 74% of the stablecoin activity happens on Ethereum. 431 Million users are active on PayPal according to data aggregator Statista, more than the global crypto user base.
The Company Maintains a Crypto Portfolio
The company’s partners in the initiative will report on PYUSD issuance on a monthly basis. Additionally, Paxos will also publish a third party attestation of reserve assets’ value as per the release. An independent third party will issue the attestation in accordance with American Institute of Certified Public Accountants (AICPA).
PayPal also holds over $900 Million worth of crypto assets, a Securities and Exchange Commission (SEC) filing reveals. Furthermore, details show the company has worth $499 Million of Bitcoin, and Ethereum worth $362 Million. It started supporting cryptocurrencies on the payments platform in October 2022. In December the company joined forces with ConSensys, creators of crypto wallet MetaMask.
Today, few mainstream giants accept cryptocurrencies as payments. In 2019, telecom giant AT&T (NYSE: T) became the first mobile carrier to accept payments in digital assets. Users can pay via BTC in Starbucks (NASDAQ: SBUX), an American coffeehouse chain.
PYPL stock has risen over 2% following the announcement. It was changing hands at $64.42 at the publication time.