PayPal launches US dollar stablecoin

PayPal, a leading player in the field of payment technology, has introduced its own stablecoin denominated in US dollars, named PayPal USD (PYUSD). This stablecoin is specifically designed to facilitate digital transactions, offering a direct 1:1 redemption for US dollars. Its underlying value is fully backed by a combination of US dollar deposits, short-term US treasuries, and equivalent cash assets.

The primary purpose of PayPal USD is to serve as a convenient tool for digital payments and Web3 applications. It has been engineered to seamlessly integrate with the most widely used exchanges, digital wallets, and Web3 applications, enhancing its usability and accessibility.

Dan Schulman, who holds the positions of both president and CEO at PayPal, emphasised the significance of having a stable digital instrument that can fluidly connect with traditional fiat currencies like the US dollar. He noted, “The evolving landscape of digital currencies demands a stable asset that is inherently digital and can be easily linked to fiat currencies. Our unwavering commitment to innovative and responsible practices, coupled with our proven track record of introducing novel solutions to our users, positions us well to contribute to the advancement of digital payments through the introduction of PayPal USD.”

In the upcoming weeks, eligible PayPal customers within the United States will have the capability to acquire PayPal USD and subsequently utilise it for a range of purposes. These include transferring the token to external wallets, conducting person-to-person payments, funding purchases at establishments supported by PayPal, and converting holdings of other cryptocurrencies to and from PayPal USD.

Functioning as an ERC-20 token built on the Ethereum blockchain, PayPal USD is under the oversight of the Paxos Trust Company. In a bid to foster consumer confidence in this ERC-20 token, Paxos Trust Company will regularly issue a Reserve Report for PayPal USD. This report will provide a transparent breakdown of the various instruments composing the reserves that back the stablecoin, thus promoting greater trust and transparency within the ecosystem.