PayPal stablecoin PYUSD launches on Ethereum
PayPal pushes the digital currency frontier with USD-backed stablecoin, fostering seamless conversion and regulated transactions.
In a move signaling the significant shift towards digital currencies, PayPal has announced the launch of its U.S. dollar-backed stablecoin – PayPal USD (PYUSD).
This development, announced by PayPal directly, adds a new dimension to the emerging potential of regulated, fully-backed stablecoins in transforming payments in digitally native environments like web3.
In a prepared statement, Paxos CEO and cofounder Charles Cascarilla said:
“With the launch of the first stablecoin by a leading financial institution, PayPal and Paxos are proving the real-world value of blockchain technology. PayPal USD is the most significant leap forward for digital assets and the financial industry and Paxos is proud to enable this transformative product.”
The news comes after progress on the project was said to have stalled in February. A company representative told Bloomberg then, “We are exploring a stablecoin…If and when we seek to move forward, we will, of course, work closely with relevant regulators.”
What is PYUSD? PayPal USD
PYUSD is fully backed by U.S. dollar deposits, U.S. Treasuries, and similar cash equivalents, providing a one-to-one redemption for U.S. dollars. Further, the company confirmed that the stablecoin will be available for U.S. customers.
Additionally, according to the terms listed in the announcement, it appears that PYUSD may become the native token of PayPal’s crypto service with no “spread” charged on the swaps.
“When you buy or sell cryptocurrency, including when you check out with crypto, we will disclose an exchange rate and any fees you will be charged for that transaction.
For currencies other than PayPal USD, the exchange rate includes a spread that PayPal earns on each purchase and sale. PayPal USD is not available in Hawaii.”
Acknowledging the need for a stable, digitally native instrument easily connected to fiat currency, Dan Schulman, President and CEO of PayPal, expressed the company’s commitment to innovation and compliance,
“Our track record delivering new experiences to our customers provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
As an ERC-20 token issued on the Ethereum blockchain, PayPal USD aims to seamlessly bridge the gap between fiat and digital currencies for consumers, merchants, and developers.
The new stablecoin is expected to facilitate fast transfers of value, enable direct flows to developers and creators, and support global brands’ continued expansion into digital assets. Moreover, PayPal USD will be compatible with web3-specific environments, with plans for availability on Venmo shortly.
PYUSD issuance and transparency
The issuance of PayPal USD is overseen by Paxos Trust Company, a fully licensed limited-purpose trust company, subject to regulatory oversight by the New York State Department of Financial Services. This regulatory oversight ensures that reserves for PayPal USD are fully backed and that the stablecoin can be bought or sold through PayPal at a rate of $1.00 per PYUSD.
Paxos intends to further enhance transparency by publishing a public monthly Reserve Report for PayPal USD outlining the instruments composing the reserves, starting September 2023.
This report will be complemented by a public third-party attestation of the value of PayPal USD reserve assets issued by an independent accounting firm by the standards established by the American Institute of Certified Public Accountants (AICPA).
In addition to offering a range of services that add utility to digital currencies, the company stated that it is committed to increasing consumer and merchant comprehension of cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs), while actively engaging with regulators as the industry evolves.
As the digital payment revolution progresses, PayPal’s new stablecoin marks a significant stride toward a more integrated digital economy.