PayPal has announced the launch of its own stablecoin cryptocurrency called PayPalUSD (PYUSD). The new digital coin is pegged to the U.S. dollar and fully backed by USD deposits held by PayPal.
PYUSD will allow PayPal customers to make peer-to-peer payments, fund purchases, and transfer balances between PayPal wallets and external crypto wallets. Users can also easily convert between PYUSD and other cryptocurrencies supported by PayPal, including Bitcoin, Ethereum, and Litecoin.
Stablecoins are cryptocurrencies designed to have a stable value, usually backed by fiat currencies like the US dollar. They aim to provide the benefits of digital currencies while avoiding the volatility typically seen in coins like Bitcoin. However, some stablecoins have failed to maintain their pegs in recent years, most notably TerraUSD.
PYUSD was developed on the Ethereum blockchain and will be issued by Paxos Trust Company, a regulated blockchain infrastructure provider. The new coin is set to become available to U.S. PayPal customers over the coming weeks. It will also roll out soon to the Venmo app, which PayPal owns.
The launch of PYUSD comes as no surprise, given PayPal's growing embrace of cryptocurrency services. In 2020, the company allowed PayPal users to buy, hold, and sell cryptocurrencies within PayPal. It has gone even further by allowing cryptocurrencies to be used as funds to make purchases from merchants.
In a statement, PayPal President and CEO Dan Schulman said that shifting toward digital currencies requires "a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar."
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.
With the launch of PYUSD, PayPal aims to make digital currency transactions faster, simpler, and usable in everyday commerce. However, the regulation of stablecoins continues to evolve, so the long-term success of PYUSD remains uncertain.