Expanding its involvement in the realm of cryptocurrencies, PayPal has taken a deeper plunge by introducing its inaugural stablecoin that is tethered to the US dollar.
Branded as PayPal USD (PYUSD), this freshly launched stablecoin has the primary purpose of establishing a seamless connection “between Fiat and Web3 for consumers.”
In a press release on Monday, Dan Schulman, President and CEO of PayPal, highlighted the necessity for a reliable instrument amidst the shift towards digital currencies. He explained that this instrument should be digitally native and possess easy compatibility with fiat currency like the US dollar. Schulman underscored PayPal’s commitment to responsible innovation and adherence to compliance, emphasizing how these qualities underpin their ability to contribute to the expansion of digital payments through PayPal USD.
This innovative stablecoin empowers PayPal’s users with an array of functionalities. They can employ PYUSD for peer-to-peer transactions, financing purchases, and converting any of the supported cryptocurrencies on the PayPal platform to and from PayPal USD. Notably, the stability of the stablecoin is reinforced not only by backing it with US dollar deposits but also by US Treasurys, enhancing its reliability.
It’s worth noting that stablecoins are a distinct category of digital assets designed to be anchored to less volatile entities such as the US dollar.
This venture into the cryptocurrency space is not entirely novel for PayPal, as it had already taken a significant step in June by enabling users to send, receive, and transfer various cryptocurrencies, including bitcoin, ethereum, and litecoin.
PayPal’s increasing involvement in the cryptocurrency sector is a significant endorsement for the industry. This sector had faced considerable setbacks in the preceding year due to the collapse of FTX.
Following the announcement of the stablecoin’s launch, PayPal’s shares experienced a more than 2% surge in premarket trading on Tuesday, signifying the market’s positive response to the news.