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In a move set to revolutionize web3, PayPal (NASDAQ: PYPL) has unveiled its newest offering – the PayPal USD (PYUSD) stablecoin. Fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents, this regulated stablecoin can be redeemed 1:1 for U.S. dollars.
Addressing the growing potential of stablecoins in payments, PayPal USD aims to provide a stable and easily accessible instrument connected to fiat currency, like the U.S. dollar. Issued by Paxos Trust Company (the company behind BUSD), the stablecoin allows eligible U.S. PayPal customers to transfer PYUSD between PayPal and compatible external wallets, send person-to-person payments, fund purchases at checkout, and convert supported cryptocurrencies to and from PayPal USD.
Dan Schulman, President, and CEO of PayPal, emphasized the need for a stable digital instrument and expressed his commitment to responsible innovation and compliance in contributing to the growth of digital payments through PayPal USD.
Building the Bridge between Fiat and Web3
PayPal USD aims to offer a seamless connection between fiat and digital currencies for consumers, merchants, and developers. As the sole stablecoin supported within the PayPal network, PYUSD leverages the company’s extensive experience in large-scale payments and the speed, cost-efficiency, and programmability of blockchain protocols. Being an ERC-20 token on the Ethereum blockchain, the stablecoin can be easily adopted by external developers, wallets, and web3 applications, further expanding its utility.
Frictionless Payments and Global Expansion
Designed to reduce friction in virtual environment transactions, PayPal USD facilitates fast value transfers, remittances, international payments, and direct flows to developers and creators. The stablecoin also fosters the expansion of digital assets by leading global brands. In line with its focus on web3-specific environments, PayPal USD will soon be made available on Venmo, enhancing its compatibility with the web3 ecosystem.
Transparency and Regulation
To instill confidence among users, PayPal USD is issued by Paxos Trust Company, a fully licensed limited purpose trust company subject to regulatory oversight by the New York State Department of Financial Services. Reserves for PayPal USD consist of fully-backed U.S. dollar deposits, U.S. Treasuries, and similar cash equivalents. The stablecoin can be bought or sold through PayPal at a fixed rate of $1.00 per PayPal USD.
Starting from September 2023, Paxos will publish a monthly Reserve Report, detailing the composition of the reserves for PayPal USD. Additionally, an independent third-party accounting firm will issue a public attestation of the value of PayPal USD reserve assets, following attestation standards set by the American Institute of Certified Public Accountants (AICPA).
Fostering Education and Adoption
Beyond developing innovative products, PayPal remains committed to promoting consumer and merchant understanding of cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). The company actively provides educational content to help users grasp the potential risks and possibilities surrounding these technologies.
With the launch of PayPal USD, PayPal sets its sights on reshaping the digital economy, providing a reliable and secure stablecoin for various transactions in the ever-evolving landscape of web3 and beyond.
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