Global Payment Firm PayPal Launches Crypto Stablecoin – How Does it Work?
Global digital payments giant PayPal Holdings Inc. is stepping into the stablecoin market.
The fintech behemoth, which was founded more than 25 years ago, is set to become the first major financial institution to launch its own US dollar-backed stablecoin, which will be called PayPal USD (PYUSD).
The stablecoin is going to be issued by Paxos Trust Co. and will be fully backed by US dollar bank deposits and other liquid equivalents, such as short-term treasuries.
PayPal first made moves into crypto back in 2020, when it began allowing users to easily buy coins like Bitcoin (BTC), Litecoin (LTC) and Ether (ETH).
It now manages about $1 billion worth of crypto.
PayPal’s move to enter the stablecoin market is a big boost for the up-until-now sluggish adoption of stablecoins, given the platform boasts a whopping 431 million userbase.
Up until now, stablecoins remain mostly used by cryptocurrency speculators as a stable digital asset to hold between trades, or as a stable digital asset for moving value between wallets/exchanges.
Stablecoins haven’t yet been able to make much inroads into everyday payments.
But PayPal is hoping to change this.
PayPal USD, which is designed to be redeemable for actual US dollars at any time, will be usable to fund purchases on the PayPal platform, as well as on PayPal’s alternative and very popular payments app Venmo.
Users will be able to seamlessly move PYUSD between their PayPal and Venmo wallets, as well as to wallets outside of PayPal’s ecosystem of platforms.
Initially, PayPal expects PYUSD to be used within web3, but the platform hopes that the stablecoin will quickly achieve broader societal adoption, such as for remittances and small payments.
In September, PayPal will begin publishing months
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