PayPal announces the launch of a new stablecoin

PayPal’s new stablecoin can be easily converted to US dollars and can also be used to buy and sell other crypto currencies available on PayPal platform

Top payments company PayPal on Monday announced the launch of a new stablecoin, PayPal USD (PYUSD) which is backed by dollar deposits, US treasuries, and cash equivalents. It will be issued by Paxos Trust Co to PayPal customers in the US.

It is a stablecoin backed by secure and highly liquid assets. As PYUSD rolls out, you will be able to buy, sell, hold, and transfer it in our app or on our site, the payments major said.

PayPal’s new stablecoin can be easily converted to US dollars whenever required and can also be used to buy and sell other crypto currencies available on its platform, like bitcoin.

A stablecoin is a type of crypto currency that is designed to have a stable value, typically pegged to a stable asset or reserve, like a fiat currency such as the US dollar or a commodity such as gold.

According to media reports, PayPal has come up as a trendsetter among top financial technology companies by adopting digital currencies for payments and transfers.

While stablecoins have been around for years now, they are yet to successfully make progress into the mainstream consumer payments ecosystem. Instead, consumers mostly use stablecoins as a means to trade other crypto currencies, such as bitcoin and ether. Tether is the world’s biggest stablecoin, followed by USD Coin, which is issued by crypto provider Circle, according to a Reuters report.

The report pointed out that top mainstream firms’ earlier efforts to launch stablecoins faced strong opposition from financial regulators and policymakers. For example, Meta faced regulatory concerns in 2019 when it planned to launch a stablecoin called Diem (formerly known as Libra), with concerns that it could disrupt global financial stability.

Several top economies, including Britain and the EU, have introduced regulations to govern stablecoins. The EU’s policies will take effect in June 2024. Recently, the US House Financial Services Committee advanced a bill to create a federal regulatory framework for stablecoins, concentrating on rules for registering and approving stablecoin issuers, Reuters reported.