PayPal Launches ‘PayPal USD’ ($PYUSD), a Fully Backed U.S. Dollar-Pegged Stablecoin for Crypto

PYUSD aims to drive mainstream adoption of digital assets by bridging fiat and crypto economies.

TL;DR: PayPal has launched its own stablecoin, PayPal USD (PYUSD), in a major move into cryptocurrency. Fully backed by U.S. dollars and issued on Ethereum, PYUSD aims to accelerate adoption of digital assets for payments and transfers.

PayPal made waves this week with the launch of its very own stablecoin, PayPal USD ($PYUSD), marking a significant milestone for the payments giant’s growing involvement in the cryptocurrency space. The U.S. dollar-pegged stablecoin is designed to provide a natively digital instrument to facilitate seamless transactions between fiat and cryptocurrencies.

Backed by U.S. Dollar Deposits and Short-Term Treasuries

According to the company’s announcement, $PYUSD is fully collateralized 1:1 by dollar deposits, short-term U.S. Treasuries, and similar liquid assets. It is issued by Paxos Trust Company and built on the Ethereum blockchain as an ERC-20 token. The stablecoin can be freely exchanged for U.S. dollars at any time through PayPal.

PayPal plans to make $PYUSD available in the coming weeks to all eligible U.S. customers with PayPal Balance accounts. Users will then be able to seamlessly conduct peer-to-peer transfers, checkout with $PYUSD at merchants that accept PayPal, swap between cryptocurrencies, and transfer funds between PayPal wallets and external crypto wallets.

Mainstream Adoption and Integration into Payments Infrastructure

Dan Schulman, PayPal’s President and CEO, stated that stablecoins like $PYUSD “have the potential to transform payments in web3 and digitally native environments.” By leveraging PayPal’s existing user base and payment infrastructure, $PYUSD is uniquely positioned to drive mainstream consumer adoption of cryptocurrency as a payment method.

PayPal has been ramping up its crypto efforts over the past few years, allowing users to buy, sell, and hold popular cryptocurrencies since 2020. With $PYUSD, it is looking to further bridge the gap between traditional finance and decentralized systems. $PYUSD is expected to be integrated across PayPal’s products, including Venmo, Xoom, and Braintree, potentially bringing digital asset utility to millions of merchants and customers globally.

Commitment to Compliance and Transparency

In keeping with its regulatory-first approach, PayPal stated that Paxos will publish monthly attested reports on $PYUSD’s reserves, providing a high level of transparency. This sets it apart from more opaque stablecoins that contributed to recent market instability. PayPal earlier obtained conditional approval for a New York BitLicense, reflecting its commitment to building crypto products responsibly within existing regulatory frameworks.

With its unparalleled scale and reach, PayPal is cementing its position at the intersection of payments and digital assets. $PYUSD represents a significant milestone in enabling consumers, merchants, and developers to harness the potential of blockchain through a trusted platform. As stablecoins gain broader traction, PayPal may well succeed in propelling cryptocurrency firmly into the mainstream.