In a groundbreaking move, Silicon Valley-based payments giant PayPal has revealed its plans to introduce a U.S. dollar stablecoin, in partnership with Paxos. The digital token, aptly named PayPal USD (PYUSD), will be pegged to the American dollar and gradually introduced to PayPal’s U.S. customer base, according to a recent press release.
The underlying stability of PYUSD will be ensured through its full backing by a combination of U.S. dollar deposits, short-term Treasuries, and comparable cash equivalents. The coin will be issued on the Ethereum blockchain, providing a digital native instrument closely tied to traditional fiat currency.
Dan Schulman, PayPal’s CEO, emphasized the importance of such stable instruments in the rapidly evolving landscape of digital currencies. He expressed confidence in PayPal’s ability to leverage its history of innovation to contribute to the growth of digital payments with the introduction of PayPal USD.
The idea of a PayPal stablecoin had been in the works for some time, with initial reports surfacing in 2021. Despite facing setbacks earlier this year, the company persisted in its pursuit of this significant step forward.
Eligible PayPal users will enjoy a range of functionalities with PYUSD. Not only will they be able to conduct transfers using the stablecoin, but they will also have the option to make purchases. Additionally, PayPal will facilitate conversions between “supported cryptocurrencies” and PYUSD, expanding its usability even further.
The launch of PYUSD is not a one-time event; instead, it will be rolled out gradually over the next few weeks. This approach allows PayPal to ensure a seamless user experience while adapting to the evolving demands of the market.
One noteworthy aspect of this development is the decision to issue the stablecoin on the Ethereum blockchain. By doing so, PayPal aims to harness the power of the vibrant and growing Ethereum community. As an ERC-20 token, PayPal USD will be accessible to external developers, various wallets, and web3 applications, potentially contributing to the broader crypto ecosystem.
Support for PayPal’s initiative also extends to the political realm. Congressman Patrick McHenry of North Carolina, who also serves as the acting chairman of the House Financial Services Committee, hailed the announcement as a signal of promise for stablecoins within a well-defined regulatory framework. This affirmation underscores the potential for stablecoins to play a pivotal role in shaping the modern payments landscape.
PayPal’s foray into the stablecoin market marks a significant milestone in the ongoing evolution of digital payments. As PYUSD makes its way into the hands of users across the United States, it carries the potential to reshape how transactions are conducted in the digital age.