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- The PayPal USD (PYUSD) issued on Ethereum is redeemable at a ratio of 1:1 with the United States dollar.
- PayPal partnered with Paxos, which facilitated the minting of BUSD, to issue the new stablecoin.
The recent change in regulatory scope on stablecoins and digital assets in the United States has undeniably created the much-needed avenue for institutional money to flow into blockchain-related projects. In June this year, the United States House Financial Services Committee, led by Chairman Patrick McHenry, held a markup of legislation to provide clear regulatory scope for stablecoins and digital assets. Already, institutional investors led by deep-pocketed hedge funds like BlackRock have shown significant interest in digital assets.
Additionally, payment giant platform PayPal Holdings has been offering its hundreds of millions of users the ability to payout in Bitcoin, Ethereum, and Bitcoin Cash. Amid the mainstream adoption of digital assets, PayPal has made another major leap toward modernizing its infrastructure.
PayPal and New Stablecoin PYUSD
In a bid to streamline its services, PayPal announced on August 07, the launch of a U.S. dollar-denominated stablecoin dubbed PayPal USD (PYUSD). Reportedly, PayPal USD (PYUSD) is wholly backed by the United States dollar and thus redeemable at a ratio of 1:1 upon request.
To begin the PYUSD rollout, PayPal announced that only eligible US accounts can transfer, send, fund purchases, and convert the stablecoin. Notably, the ERC-20 stablecoins will require Ether for gas payment, thus enabling Web3 developers to tap into the PayPal vast payment network.
The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar.
Said Dan Schulman, president and CEO, of PayPal.
Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.
The company announced that PayPal USD will soon be available on Venmo, in a bid to increase its mainstream adoption. Meanwhile, other blockchains led by Justin Sun-backed Tron (TRX) have requested PayPal to issue its stablecoins through their networks.
I cordially invite PayPal to consider issuing PYUSD on #TRON, which is Fast, secure, and cost-effective with 12 billion USD daily transactions. Mutual benefits await in the digital payment landscape. Let's collaborate for a thriving ecosystem! 🙏
— H.E. Justin Sun 孙宇晨 (@justinsuntron) August 7, 2023
Notably, the PayPal-backed stablecoin has been slammed for including some disturbing commands in its source code. The company has put an asset protection function that can wipe out user balance in two transactions, by first freezing the assets and then wiping out the address. Already, the company has had long-standing issues with most users for blocked accounts and held balances.
🚨JUST IN: The stablecoin of PayPal can be frozen. #XRP can never be frozen and 100% decentralized! pic.twitter.com/JYlYXkzjPj
— JackTheRippler ©️ (@RippleXrpie) August 8, 2023
Market Outlook
The launch of PYUSD on the Ethereum network significantly helps the growth of Ether in the United States as a non-security asset. Notably, Ethereum had a market capitalization of approximately $220 billion and a 24-hour trading volume of about $7.4 billion. PayPal stock closed Monday trading at $64.42, up 2.66 percent, which perhaps signaled an end to its losing streaks.
