Main topic: PayPal launches its own stablecoin, PayPal USD, pegged to the US dollar.
Key points:
1. PayPal USD is backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents.
2. The stablecoin is issued on the Ethereum blockchain by the Paxos Trust Company, regulated by the New York State Department of Financial Services.
3. Users can buy, sell, send, and use PayPal USD for payments, as well as transfer it to external wallets or convert other cryptocurrencies.
PayPal has launched its own stablecoin called PayPal USD (PYUSD) in the United States, aiming to eliminate price volatility in digital currencies and facilitate confident payments, despite unclear regulatory guidelines for digital assets in the country. PayPal's large user base and market share in online payment processing could significantly impact stablecoin adoption. However, there are potential advantages and disadvantages associated with PYUSD, including its potential to onboard mainstream users to the digital economy and the lack of regulatory clarity in the US.
PayPal's stock has been struggling, but the author believes that the company is still in a favorable environment, with healthy metrics and valuations, and has the potential for future growth, particularly through its Venmo platform.
Australian crypto exchange Independent Reserve has partnered with PayPal to allow customers to fund their crypto accounts directly with fiat from their PayPal wallet and withdraw funds from the exchange, mitigating the risks posed by increasing bank restrictions on crypto exchange payments.
Coinbase has announced its plans to list PayPal's stablecoin, PYUSD, becoming the second major U.S.-based exchange to embrace the digital asset and signaling the rapid mainstream acceptance of the stablecoin.
Elon Musk's potential plan to turn Twitter into an updated version of PayPal could have significant implications for the price of cryptocurrencies like Bitcoin and Ethereum.
Stablecoin issuer Tether has become one of the top buyers of US Treasury bills, with an exposure of $72.5 billion, ranking above several countries, according to Tether's CTO Paolo Ardoino. This highlights the relevance of USDT in emerging markets as a protection against inflation.
PayPal's stablecoin, PYUSD, has struggled to gain traction in the market, with a market capitalization of only $43.4 million compared to stablecoin leaders USD Coin and Tether, which have market capitalizations of $83 billion and $26 billion respectively, and trading volumes for PYUSD remain low.
PayPal's stablecoin, PayPal USD (PYUSD), is now available for purchase on Venmo, allowing users to buy the cryptocurrency and marking the first instance of wallet interoperability with no costs between PayPal and Venmo.
Despite announcing its plans to eliminate secured loans, Tether, the largest stablecoin issuer, has experienced a rise in such loans in 2023, with $5.5 billion of loans in its recent quarterly report, although it aims to reduce this to zero by 2024.
A new report by the Federal Reserve Banks of Boston and New York concludes that stablecoins, such as Tether and USD Coin, have similar vulnerabilities as money market funds and could potentially inject instability into the broader financial system.
PayPal's stablecoin, backed by the US dollar, has become available on the Crypto.com exchange, which now holds the deepest liquidity for trading pairs with the PayPal USD (PYUSD) stablecoin globally.
Former president of PayPal and ex-Facebook vice-president, David Marcus, believes that Bitcoin is the only form of neutral internet money and is better equipped than any other crypto asset to resist challenges and attacks.
Digital currencies, particularly payment stablecoins, have the potential to upgrade America's financial system and benefit families and businesses by making transactions easier, faster, and cheaper, but this can only be achieved if Washington passes stablecoin legislation that prioritizes financial stability and consumer safety.
