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.
Cryptocurrencies pegged to the dollar are posing a potential threat to Visa and PayPal, highlighting the potential in digital payments, although this trend is not yet reflected in the stock market.
Bitcoin and other cryptocurrencies remained stable on Wednesday after a significant decline, indicating a bearish trend supported by technical factors.
Coinbase plans to list PayPal's stablecoin, PYUSD, signaling the convergence of traditional finance and the crypto economy and potentially challenging Tether's dominance in the stablecoin market.
Circle's USD Coin (USDC) has experienced a significant drop in market cap due to factors such as the depegging event earlier this year, rising interest rates, and differences in issuance models compared to Tether's USDT stablecoin, which recently reached a new high in market cap at $83 billion.
Tether (USDT) is the world's largest stablecoin with over $66 billion in market capitalization, despite controversies surrounding its collateral and reserve holdings.
Bitcoin and Ether remain stable as cryptocurrency investor sentiment remains cautious, although JPMorgan analysts report a slowdown in downward price momentum, and the Forkast 500 NFT Index gains after a surge in sales of Donald Trump's signature NFT collection following his arrest.
The largest stablecoin, USDT, has been depegging throughout August, leading to concerns about its stability and trustworthiness, with factors such as the redemption fee and minimum requirements being identified as potential contributors to the issue.
Stablecoins are designed to reduce crypto market volatility by tying their value to a reliable asset, providing investors with stability, transparency, and access to the financial system while minimizing risks.
The dollar remained stable as investors weigh US jobs data that showed signs of cooling and the likelihood of the Federal Reserve ending its monetary tightening cycle.
The safe-haven dollar weakened as risk sentiment improved due to hopes of China's policy stimulus stabilizing the economy and U.S. jobs data suggesting a potential end to the rate hike cycle by the Federal Reserve.
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.
Circle, the company behind the stablecoin USDC, faced a crisis when $3.3 billion of its reserves were stuck at Silicon Valley Bank, causing USDC to lose its $1 peg and lose market share to rival stablecoin Tether, revealing the challenges and shortcomings of Circle's ambitions to reshape the financial system with its dollar-backed token.
The Federal Reserve's quantitative tightening program, which involves reducing its balance sheet, has not had a significant impact on the market so far, as private sector participants have taken over its role in the Treasury market; however, there is still a risk to banking reserves if money market funds stop buying T-bills.
A joint policy paper by the IMF and FSB advises against blanket bans on cryptocurrency and instead recommends targeted restrictions and sound monetary policy to mitigate risks, highlighting that global stablecoins pose a greater risk to financial stability than other cryptocurrencies.
Bitcoin, Ethereum, and Dogecoin remained relatively stable as the global cryptocurrency market cap increased slightly, while the Financial Accounting Standards Board endorsed regulations for accounting fair values of companies' cryptocurrency holdings.
USDC stablecoin issuer Circle has responded to proposed changes to the EU's financial crime policies, expressing concerns about the lack of clarity in the terminology used and arguing that technology does not necessarily increase money laundering and terrorist financing risks.
Despite Visa's announcement and warnings from Binance's CEO, major cryptocurrencies such as Bitcoin and Ethereum are struggling in a bearish trend while a top Federal Reserve official expresses deep concern over the $120 billion stablecoin market.
Bitcoin and other digital assets are at risk of a deeper market correction due to the contraction of stablecoin liquidity, according to crypto analyst Nicholas Merten.
The amount of stablecoin USDT on crypto exchanges is increasing, which is seen as a positive sign, while the supply of Bitcoin and Ethereum on exchanges is decreasing, indicating strong holding sentiment and potential future buying interest.
PayPal's stablecoin ambitions are driven by potential savings on multicurrency transactions, but Tether co-founder William Quigley believes it is unlikely to bring much innovation and may primarily serve as a cost-saving measure for PayPal. Quigley explains that stablecoins allow PayPal to bypass financial intermediaries, conduct transactions on its private blockchain, and eliminate fees associated with currency conversions. He also highlights the potential profits that stablecoin operators can earn from interest-rate increases.
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.
Stablecoin Tether has invested $420 million in German bitcoin miner Northern Data to gain a 20% stake and access to 10,000 Nvidia H100 GPUs, aiming to become a major cloud GPU player in the AI industry.
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.
Tether, the firm behind stablecoin USDT, has made a strategic investment in crypto miner Northern Data Group in support of artificial intelligence initiatives and potential collaborations involving AI, P2P communications, and data storage solutions.
Bitcoin and other cryptocurrencies remain stable or slightly higher despite turbulence in the stock market, but this calm may not last.
U.S. Treasury yields remained stable as investors monitored economic reports and expressed concerns about the future of monetary policy and high interest rates.
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.
Stablecoin issuer Circle argued in a court filing that tokens pegged to a sovereign currency, like the US dollar, are not securities, amid the Securities and Exchange Commission's (SEC) lawsuit against Binance, highlighting the potential implications for stablecoins as a whole.
Interest-bearing stablecoins are becoming increasingly popular in the DeFi sector as they offer attractive yields generated from real-world assets, such as T-Bills and government bonds, providing a transparent and auditable alternative to traditional banking systems.
Bitcoin and gold are expected to thrive amidst fiscal problems in the US economy and a potential pivot from the Federal Reserve, according to macro investor Luke Gromen. Gromen also suggests that the launch of a gold-backed currency by the BRICS alliance may weaken the US dollar as the world's reserve currency.
The market capitalization of stablecoins has dropped by 35% in the past 18 months due to factors such as reduced retail participation, surging US treasury yield, and high opportunity cost, with only a few stablecoins like USDT remaining resilient and dominant in the market. The decline is attributed to traditional finance rates exceeding crypto-native yields, and the market share decline of US-native stablecoins is seen as a result of U.S. regulation hostility. Stablecoins are considered the "killer app" of the crypto industry, comprising a significant portion of settlement activity on public blockchains. The trend is expected to reverse when there is revived interest in crypto trading, steady interest rate cuts, and a pro-crypto regulatory environment.
Polygon-based stablecoin Real USD (USDR) plummeted to $0.51 after its treasury, exclusively holding a $6.2 million insurance fund and backed by TNGBL token, was drained of DAI, indicating its inability to liquidate large amounts due to low trading volume.
Real estate-backed stablecoin USDR lost its peg to the U.S. dollar due to a rush of redemptions, causing a drain on liquid assets and resulting in a price drop to $0.53 per coin, but the project team assures that real estate holdings and digital assets will still support redemptions.
Bitcoin (BTC) remains stable as U.S. inflation data surpasses expectations, leading to uncertainty in monetary policy and the Federal Reserve's ability to cut interest rates; market participants are cautious about a potential upside for BTC in the short term.
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.
Stablecoin issuer Tether freezes addresses containing $873,000 USDT linked to illicit activity in Israel and Ukraine, collaborating with local law enforcement agencies to block the use of funds linked to terrorist financing.
Stablecoin issuer Tether has frozen funds in 32 cryptocurrency addresses linked to terrorism and warfare in Israel and Ukraine, working with Israel's National Bureau for Counter Terror Financing (NBCTF) in an effort to counter cryptocurrency-funded terrorism and warfare.
Stablecoin issuer Tether plans to publish real-time data on the reserves backing its largest dollar-pegged stablecoin, USDT, by 2024, according to a Bloomberg report.
Tether, the world's largest stablecoin issuer, plans to start publishing reserve data in real-time by 2024, according to the company's chief technical officer and incoming CEO Paolo Ardoino.
Bitcoin and other cryptocurrencies remained stable amidst stock market upheaval, as investors speculate that digital assets now serve as a safe haven during geopolitical uncertainties.
