PayPal, the digital payment giant, has decided to enter the cryptocurrency arena in a unique way. The company announced the introduction of its own cryptocurrency backed by the US dollar, based on Ethereum blockchain technology.
On Monday, August 7, PayPal officially announced the debut of its stablecoin based on Ethereum and backed by the US dollar. Named PYUSD, the cryptocurrency will become available to eligible US customers in the coming weeks.
The PYUSD cryptocurrency, based on the ERC-20 standard, can be used for transfers between the PayPal wallet and external wallets supporting this standard. It will also be available for payments between users, topping up purchases, and converting other digital assets available on the platform to PYUSD and vice versa.
Dan Schulman, CEO of PayPal, emphasized the significance of this move, saying, “The shift towards digital currencies requires a stable tool that is both native to the digital world and easily linked to traditional currency like the dollar.” PYUSD is intended to serve as a bridge between traditional payment methods and the modern Web3 ecosystem for both consumers and businesses.
The responsibility for issuing PYUSD rests with Paxos Trust Company, a renowned financial institution based in New York, specializing in blockchain technology. The cryptocurrency’s backing includes deposits in US dollars, US treasury securities, and other equivalent financial instruments. The purchase or sale price of PYUSD has been set at a fixed level of 1 dollar per PYUSD unit via the PayPal platform.
Another important element is transparency. From September 2023, Paxos company will publish a monthly public reserve report for PYUSD, as well as confirmations from independent third parties regarding the value of PYUSD reserve assets.
This is a significant achievement for PayPal, which had previously tried to explore the potential of stablecoins. Although in early 2023 the company reported halting the project due to regulatory concerns, the current introduction of PYUSD indicates an agreement with regulatory bodies.
It has long been known that PayPal has been intensively exploring the world of cryptocurrencies for several years. The company recently revealed that it holds cryptocurrency assets worth almost 1 billion dollars on behalf of its customers.
PayPal’s integration of cryptocurrencies represents a significant step forward in connecting the traditional financial world with modern blockchain technologies. PYUSD is expected to contribute to further education and understanding of cryptocurrencies and central bank digital currencies among a broad consumer base.
