PayPal has decided to double down in the world of cryptocurrencies. The financial company announced last Monday the official launch of a stablecoin named PayPal USD, or PYUSD.
Within the world of cryptocurrencies, a stablecoin is defined as a type of cryptocurrency whose value is tied to an external asset. In this case, PayPal USD is pegged to the value of the American dollar. This means that users will be able to convert their assets into dollars whenever they want, conveniently facilitated through PayPal.
The announcement of PayPal USD isn’t a surprise. We’ve known about PayPal’s preparation for this launch since 2022, but high-profile setbacks like the FTX disaster seem to have temporarily slowed down the project.
As PayPal explains in their press release, PayPal USD is an ERC-20 token integrated into the Ethereum network. This crypto asset will be available for use by external developers, for wallets, and web3 applications. Moreover, they have also announced future compatibility with Venmo.
PayPal USD is issued by Paxos Trust Company, a fiduciary company subject to regulatory oversight by the New York Department of Financial Services. As PayPal explains, the reserves for PayPal USD are backed by deposits in US dollars, US Treasury bonds, and other cash equivalents.
To ensure security and transparency, PayPal states that Paxos will provide monthly reports detailing the reserves of PayPal USD. Additionally, Paxos will also “publish a public attestation by third parties regarding the value of PayPal USD’s reserve assets.”
For now, PayPal USD will only be available in the United States. This is a logical move, especially considering that each country has distinct legislation and regulations.
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