May 23, 2024
Altcoins News

PayPal Launches New Stablecoin, PYUSD, Backed by USD Reserves

American fintech giant PayPal made a significant move in the cryptocurrency space by introducing its new stablecoin, PayPal USD (PYUSD), on August 7. This stablecoin is backed by the US dollar and will be issued by Paxos Trust Co., ensuring that it is fully supported by deposits in US dollars, short-term Treasuries, and other cash equivalents. Built on the Ethereum blockchain, PYUSD is specifically designed for digital payments and Web3 applications, and it will soon be accessible to customers in the United States.

PYUSD is designed to maintain a 1:1 peg with the US dollar, making it redeemable for USD at any time. Additionally, PayPal users will have the option to exchange it for other cryptocurrencies on the platform. In the near future, PayPal plans to integrate PYUSD as a payment method for various purchases, and users will be able to transfer it between PayPal and Venmo.

The launch of this stablecoin is a significant step for PayPal, as it aims to solidify its position as a major player in the crypto payment industry. The company began its foray into the crypto market in 2020 when it introduced support for Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) for buying, selling, and holding, as well as facilitating payments using these digital assets.

PayPal’s CEO, Dan Schulman, envisions PYUSD becoming an integral part of the overall payments infrastructure. The company had initially confirmed its plans to create a stablecoin in January 2022 and committed to working closely with regulators during its development.

While several stablecoins exist in the crypto market, PayPal’s PYUSD stands out as the first to be launched by a major payment processing giant. Charles Cascarilla, the CEO of Paxos, expressed his belief in the real-world value of blockchain technology, stating that the introduction of PYUSD represents a transformative development for digital assets and the financial industry.

The regulatory environment surrounding stablecoins in the US is gradually progressing toward greater clarity, creating a demand for alternative stablecoins from those currently available in the market. As of now, the stablecoin market has a circulating supply of $126 billion, with Tether’s USDT leading with an $86.5 billion market cap, followed by USD Coin (USDC) by Circle with a market cap of $26 billion, among others. However, many of these stablecoins have recently encountered regulatory challenges in the US. Policymakers are presently engaging in bipartisan discussions on a stablecoin bill to address these matters.

Image by Marco Verch on CCNull

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