PayPal introduced its new stablecoin called PayPal USD, denominated in the U.S. dollar, on Monday. This move marks a key milestone, as it makes PayPal the first major player in the financial technology sector to embrace digital currencies for seamless payments and transfers.
The purpose behind PYUSD is to capitalize on the potential benefits offered by stablecoins in the completion of transactions. Notably, it is fully backed by short-term U.S. Treasury securities, U.S. dollar deposits and analogous liquid assets, ensuring its stability. The stablecoin can be redeemed on a one-to-one basis for U.S. dollars, and its issuance is under the stewardship of Paxos Trust Firm.
PayPal’s stablecoin seeks to simplify in-experience payments in virtual settings by facilitating quick value transfers for supporting family, friends, remittances, and international transactions. Additionally, it enables direct payments to creators and developers while encouraging the global spread of digital assets among top brands.
Users of U.S. PayPal who choose to purchase PYUSD will be able to move the stablecoin between their PayPal accounts and compatible third-party wallets. Additionally, they can carry out peer-to-peer transactions, pay for items with the stablecoin at checkout, and convert any supported crypto into and out of PYUSD.
During the launch, PayPal CEO Dan Schulman underlined the necessity for a reliable tool to bridge the gap between digital currencies and conventional fiat currencies such as the U.S. dollar. Additionally, he voiced confidence in PayPal’s ethical innovation and compliance, which would open the door for the expansion of digital payments via PayPal USD.
Being the only stablecoin integrated into the company’s network, PayPal USD capitalizes on PayPal’s extensive experience in large-scale payments while harnessing the benefits of blockchain protocols, such as speed, cost-effectiveness and programmability.
The announcement of PayPal’s venture into stablecoins boosted the company’s shares by 2.5 percent in Monday’s afternoon trading, signaling the company’s trust in the digital currency industry despite the regulatory challenges faced by others this year.
Prior attempts by well-known mainstream companies to create stablecoins were met with fierce opposition from lawmakers and financial regulators. For instance, serious worries about potential alterations to the stability of the global financial system were raised over Meta’s (previously Facebook) 2019 intention to launch Libra.
Since then, a number of significant economies, such as the European Union and the United Kingdom, have created regulations for stablecoins, with EU rules slated to go into force in June 2024.
In the United States, a measure has been advanced to establish a stablecoins regulatory framework for focusing on the registration and licensing procedures for issuers.
The entry of PayPal into the crypto space will likely have a positive effect upon the public. Other industry actors such as HIVE Blockchain Technologies Inc. (NASDAQ: HIVE) (TSX.V: HIVE) could see this as validation for their belief that the time has come for blockchain and crypto, and nothing can stop its onward march.
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