PayPal announced it is launching a U.S. dollar stablecoin in conjunction with Paxos.
The new digital token will be pegged to the dollar and βgraduallyβ made available to PayPalβs customers in the U.S., the company said in aΒ press release.
Paxos will issue the coin labeled PayPal USD, or PYUSD. Issued on the Ethereum blockchain, PYUSD will be βfully backed by U.S. dollar deposits, short-term Treasuries and similar cash equivalents,” the company also said.
PayPal USDΒ is designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents. PayPal USD is redeemable 1:1 for U.S. dollars and is issued byΒ Paxos Trust Company.
U.S. PayPal customers who purchase PayPal USD will be able to:
- TransferΒ PayPal USD between PayPal and compatible external wallets
- SendΒ person-to-person payments using PYUSD
- Fund purchasesΒ with PayPal USDΒ by selecting it at checkout2
- ConvertΒ any of PayPal’s supportedΒ cryptocurrenciesΒ to and from PayPal USD
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” saidΒ Dan Schulman, president and CEO, PayPal. “Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
Building the Bridge Between Fiat and Web3 for Consumers, Merchants and Developers
PayPal USD will be available to consumers, merchants and developers to seamlessly connect fiat and digital currencies. As the onlyΒ stablecoinΒ supported within the PayPal network, PayPal USD leverages PayPal’s decades-long experience in payments at scale, combined with the speed, cost and programmability of blockchain protocols. As an ERC-20 token issued on theΒ EthereumΒ blockchain, PayPal USD will be available to an already large and growing community of external developers, wallets and web3 applications, can be easily adopted by exchanges, and will be deployed to power experiences within the PayPal ecosystem.
PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets by the largest brands in the world. Most of the current volume of stablecoins is used in web3-specific environments β PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo.
U.S. Dollar Denominated, Redeemable and Transparent
PayPal USD is issued by Paxos Trust Company, a fully licensed limited purpose trust company subject to regulatory oversight by theΒ New York StateΒ Department of Financial Services. InΒ June 2022, PayPal was issued a BitLicense by NYDFS after previously obtaining a conditional BitLicense.
Reserves for PayPal USD are fully backed by U.S. dollar deposits, U.S. Treasuries and similar cash equivalents, and PayPal USD can be bought or sold through PayPal at a rate ofΒ $1.00Β per PayPal USD.
Beginning inΒ September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves. Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets. The attestation will be issued by an independent third-party accounting firm and conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA).
Focusing on Education, Understanding and Adoption of Digital Currencies
In addition to building products and services that add utility to digital currencies, PayPal is focused on increasing consumer and merchant comprehension ofΒ cryptocurrencies, stablecoins and central bank digital currencies (CBDCs), while working closely with regulators as the industry evolves. In addition to offering PayPal USD for U.S. accountholders, PayPal currently offers customers the ability to buy, hold, sell and transfer selectΒ cryptocurrencies, and provides educational content to help accountholders understand the risks and possibilities surrounding the technology.