American financial technology company PayPal launched a new stablecoin called PayPal USD (PYUSD) on Aug. 7.
The U.S. dollar-pegged stablecoin will be issued by Paxos Trust Co. and fully backed by U.S. dollar deposits, short-term Treasurys and similar cash equivalents. It’s built on Ethereum and “designed for digital payments and Web3,” with the firm saying it will soon be available to United States customers.
PYUSD will be redeemable for U.S. dollars at all times, can be exchanged for other cryptocurrencies on PayPal, and will be transferable between PayPal and Venmo. The company claims it will soon be available as a mode of payment for various purchases.
PayPal launching a stablecoin could accelerate its efforts to become a crypto payment giant, an initiative the company started in 2020 after making way for crypto payments on the platform.
PayPal boasts over 350 million active users and already lets users in the U.S. and the United Kingdom buy, sell and hold Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) while also enabling payments in the assets.
PayPal CEO Dan Schulman hopes the new stablecoin will become a part of the overall payments infrastructure. The company first confirmed its plan to launch a crypto stablecoin in January 2022, claiming it would work closely with relevant regulators.
While there are multiple stablecoins available in the crypto market, PayPal will be the first launched by a major payment processor. Paxos CEO Charles Cascarilla told Cointelegraph:
“With the launch of the first stablecoin by a leading financial institution, PayPal and Paxos are proving the real-world value of blockchain technology. PayPal USD is the most significant leap forward for digital assets and the financial industry, and Paxos is proud to enable this transformative product.”
The firm claimed that the regulatory environment around stablecoins in the U.S. is gradually “progressing toward more clarity,” and thus, there is demand for an alternate stablecoin than what is currently available in the market.
Related: US Treasury says it must ‘modernize and adapt’ to digital currencies
The crypto stablecoin market has a $126 billion circulating supply, dominated by Tether-issued USDT (USDT) (which has an $86.5 billion market cap) and followed by Circle-issued USD Coin (USDC) (with a $26 billion market cap) and a few others. However, many stablecoins have recently faced regulatory hurdles in the United States, where policymakers are currently discussing a bipartisan stablecoin bill.
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