Global payment giant PayPal (PYPL) announced in August 2023 that it would cooperate with financial technology company Paxos to launch PayPal USD (PYUSD), a stable currency pegged to the US dollar, becoming the first large financial technology company to embrace digital currency payments and transfers. Users can buy and sell on PayPal's app or website for $1.00 per PYUSD.
In this article, we will introduce the PayPal USD stablecoin in detail.
On May 29, it was reported that the stable currency PYUSD will be listed on Solana. This move aims to expand the PYUSD stable currency as a small-amount and Usage of payment methods for everyday purchases.
It is reported that in addition to cost and speed, PYUSD also has new superpowers on Solana that are impossible to achieve on Ethereum. For example, it uses the chain’s “token extension” standard to make merchant transfers more confidential. It is one of PYUSD's few compliance and programmability features.
Global payment giant PayPal launched the US dollar stable currency "PayPal USD" (PYUSD) on August 7, 2023, becoming the first company to embrace cryptocurrency payment and A large fintech company that transfers money.
It is reported that PayPal USD aims to contribute to providing opportunities for stablecoin payments and is 100% backed by U.S. dollar deposits, short-term U.S. Treasury bonds and similar cash equivalents. PayPal USD is convertible into U.S. dollars at a 1:1 rate and is issued by Paxos Trust Company.
Once the stablecoin launches, eligible U.S.-based PayPal customers who want to purchase PayPal USD will be able to:
PayPal USD will be available for consumers, merchants and developers to seamlessly connect fiat and digital currencies. As the only stablecoin supported within the PayPal network, PayPal USD leverages PayPal's decades of experience in large-scale payments and combines it with the speed, cost, and programmability of blockchain protocols. As an ERC-20 token issued on the Ethereum blockchain, PayPal USD will be available to the already large and growing community of external developers, wallets, and web3 applications, can be easily adopted by exchanges, and will be deployed Enhance the experience ecosystem within PayPal.
PayPal President and CEO Dan Schulman said:
“The transition to digital currency requires a stable tool that is both digitally native and "Our commitment to responsible innovation and compliance, and our track record of delivering new experiences for our customers, provide the necessary foundation to drive the growth of digital payments through PayPal USD." 》
PayPal USD is issued by Paxos Trust Company, a fully licensed limited purpose trust company regulated by the New York State Department of Financial Services. In June 2022, after receiving the conditional BitLicense, PayPal obtained a BitLicense issued by NYDFS.
PayPal USD's reserves are fully backed by U.S. dollar deposits, U.S. Treasury securities, and similar cash equivalents, and PayPal USD can be bought and sold through PayPal at a price of $1.00 per PayPal USD.
Beginning in September 2023, Paxos will publish the PayPal USD public monthly reserve report outlining the instruments that make up the reserve. Paxos will also publish public third-party certification of the value of PayPal’s U.S. dollar reserve assets. The assurance will be issued by an independent third-party accounting firm and conducted in accordance with the assurance standards set by the American Institute of Certified Public Accountants (AICPA).
PYUSD was launched by PayPal, but as an ERC-20 token, issued on the Ethereum blockchain.
Paxos has officially announced the PYUSD contract address, and the total supply of PYUSD is 399,102,730 pieces (as of the time of writing this article). Unlike many other stablecoins, PYUSD is backed by U.S. dollar deposits and other cash equivalents, which provide greater stability and more reliable exits than other common stablecoin backing methods such as commercial paper or commodities.
Paxos also announced that starting in September 2023, it will publish monthly PYUSD reserve reports and facilitate third-party audits of reserves in accordance with American Institute of Certified Public Accountants (AICPA) standards.
For more than 20 years, PayPal has been at the forefront of the digital payments revolution. By leveraging technology to make financial services and commerce more accessible, affordable and secure, the PayPal platform is helping hundreds of millions of consumers and merchants in more than 200 markets join and thrive in the global economy.
PayPal began to enter the cryptocurrency market in late 2020, allowing customers to buy, hold and sell specific amounts of cryptocurrencies. The news that PayPal launched the US dollar stable currency this time drove the stock price to rise, reflecting the market's confidence in the cryptocurrency industry.
Foreign media reports pointed out that through PYUSD, PayPal CEO Dan Schulman is seeking to consolidate his company's dominant position in the field of digital payments, relying on technology to achieve instant and low-cost transfers without the need for central intermediaries. Over time, Schulman said, new stablecoins will become part of the entire payments base.
Jose Fernandez da Ponte, head of PayPal’s blockchain and digital currency team, said in an interview that the company now believes that the regulatory environment is moving in a clearer direction and is not interested in alternative stablecoins due to market concentration. demand is rising.
The U.S. House Financial Services Committee proposed a bill to regulate cryptocurrencies last month, and the case was supported by North Carolina Republican Patrick McHenry.
McHenry said in a statement on Monday that PYUSD shows that stablecoins can bring hope to payment systems if issued under clear regulations. Clear regulation and strong consumer protections are important for stablecoins to reach their full potential.
Stablecoins are cryptocurrencies pegged to assets such as the U.S. dollar. They have existed for nearly a decade and are designed to protect them from violent fluctuations. They are mainly used by traders to transfer between exchanges. Digital assets, however, have made limited progress in consumer payments. In addition, the volatility of the currency circle makes it difficult to use digital assets for payment or as a store of value.
Argus Research analyst Stephen Biggar said that PayPal’s brand is important for the launch of stable coins. The company has been involved in cryptocurrency before, and this plan is not surprising.
It is worth noting that PayPal is a major financial technology player with cryptocurrency experience. The launch of the US dollar stable currency PYUSD may become a strong opponent of Tether and Circle, the issuer of another stable currency USD Coin. .
In this regard, Tether Chief Technology Officer Paolo Ardoino said that the launch of PayPal USD will have little impact on Tether (USDT) because Tether does not provide services in the United States. Furthermore, he believes this is a positive for the entire cryptocurrency industry.
Jeremy Allaire, CEO of Circle, also tweeted congratulations to PayPal and Paxos shortly after the news was released, and believed that this was a sign that supervision was becoming increasingly clear.
However, David Wells, who was responsible for the company’s two stablecoin products, BUSD and USDP, commented that PYUSD essentially attracts user groups that trust U.S. supervision and belongs to the same category as USDC. Dow: “PYUSD and USDC may compete for a similar customer base that prefers to use U.S.-regulated stablecoins rather than the offshore stablecoin market segment, but for PYUSD to fully compete with USDC, PYUSD needs to have a strong presence in cryptocurrencies. Listed on exchanges. "
David Wells pointed out, "It is unclear when/if PYUSD will be listed on major exchanges, so there may be a focus on cross-platform payment use cases. In the long term, PYUSD may also Competing with USDC in cryptocurrency trading market share, possibly in the DeFi field"
Despite being nearly a year in development, PayPal’s stablecoin is expected to gain faster adoption. However, various indicators indicate that this expectation has not been realized, and mature stablecoins such as USDC and Tether USDT still maintain market dominance.
However, as the only stablecoin supported by the PayPal network, PYUSD makes full use of PayPal’s decades of large-scale payment experience. Serving as a bridge between the traditional, real-world payments and cryptocurrency worlds, it combines its TradFi-built payments network with the speed, cost and programmability of blockchain protocols.
By complying with regulatory standards and leveraging its existing TradFi infrastructure, PayPal is expected to officially introduce cryptocurrencies into the global payments ecosystem.
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