According to Reuters, Paypal has just launched its own stablecoin, becoming the first major financial technology company to use digital currency for payments and transfers.
Paypal’s stablecoin, called PayPal USD (PYUSD), is pegged to USD and short-term US Treasuries. PYUSD was created to reduce the difficulty of payments in cyberspace and cross-border money transfers. PayPal CEO Dan Schulman said the move to digital currencies requires a stable tool that is both digitally native and easily connects to fiat currencies like USD. PYUSD can be exchanged for USD at any time and used to buy and sell other cryptocurrencies that PayPal offers on the platform, including Bitcoin.
Blockchain infrastructure company Paxos, the issuer of PYUSD, says Paypal’s stablecoin is proving the value of blockchain technology in the real world. Paxos CEO Charles Cascarilla said that PYUSD represents the next phase of USD on the blockchain, as well as the most important step forward for digital assets and the financial industry
According to The Washington Post, a Paxos representative said blockchain is transforming financial services, and Paxos will lead the process by providing global businesses with a secure, compliant, and regulated infrastructure solution. tight management.
However, stablecoins are not always as stable as expected. In May 2022, the collapse of the digital currency Luna and the stablecoin TerraUSD (UST) wiped out about 40 billion USD from the cryptocurrency market. The US Securities and Exchange Commission (SEC) accused founder Do Kwon of misleading investors about the stability of the coin.
While stablecoins have been around for years, they haven’t made it far into the consumer payments ecosystem. Instead, consumers are primarily using stablecoins as a means to trade other cryptocurrencies, like Bitcoin and Ether.
In 2019, Meta plans to launch the stablecoin Libra but quickly faced stiff opposition from financial regulators and policymakers over fears it could upset global financial stability. The project was then sold to Silvergate Capital for $182 million in February 2022.
Last month, the US House of Representatives Financial Services Committee introduced a bill to establish a federal regulatory framework for stablecoins, which would focus on regulations on registration and approval processes for issuers. operate stablecoins. US Republican Patrick McHenry said PYUSD is a sign that stablecoins will become one of the pillars of a 21st-century payments system