Payments giant PayPal is gearing up to take yet another step in the crypto space, as it plans on introducing its own stablecoin that will be named PayPal USD.
This will be a dollar-pegged stablecoin that Paxos Trust Co. will issue. Dan Schulman, the CEO of PayPal, said that the stablecoin would become part of the company’s overall payments infrastructure.
According to the announcement from the company, dollar deposits, short-term treasuries, and cash equivalents will back PayPal USD (PYUSD).
It will be an ERC-20 token that will be issued on the Ethereum blockchain. Currently, the stablecoin market is led by Tether (USDT), while the second spot is held by Circle (USDC).
Stablecoins are also a type of cryptocurrency, but the difference is that they track the price of a fiat currency, which is usually US dollar or pound.
The latest offering from PayPal will work alongside the company’s other offerings in the crypto industry. This means that users will be able to swap the stablecoin for other assets, or even cash, on its platform.
Eligible users in the United States will be able to use the stablecoin, which means they will be able to transfer it between their PayPal account and other external wallets that are compatible.
They would also be able to use PayPal USD for making person-to-person payments or convert any cryptocurrencies supported on PayPal to stablecoin at vendor checkout points.
PayPal had first begun its push in the crypto industry back in 2021. In March, the payments firm introduced its crypto checkout service for merchants, which meant that users could use crypto for making payments.
In May of the same year, the company continued with its crypto expansion, as it launched third-party integrations.
This enabled users to purchase Bitcoin on PayPal and they were also able to send it from the platform to others.
According to PayPal, monthly reserve reports will be published by Paxos on a monthly basis for the PayPal USD stablecoin.
These reports will shed light on the instruments that make up the reserves of the stablecoin. In addition, it will also get attestations from third parties for the value of the reserve assets.
An independent third-party accounting firm would release the said attestation and it would be conducted in accordance with the standards established by AICPA.
This is the American Institute of Certified Public Accountants.
Charles Cascarilla, the co-founder and CEO of Paxos, said that blockchain technology’s value in the real world was coming to light with the launch of the first stablecoin by a top financial firm.
The CEO said that PayPal’s stablecoin was a major leap forward for the financial industry as well as digital assets.
The New-York based firm had announced earlier this year that it was terminating its relationship with Binance, the largest crypto exchange in the world.
It helped the exchange in minting the exchange’s BUSD stablecoin. The company made the move due to action from the US Securities and Exchange Commission (SEC).
The securities regulator had been planning to file a lawsuit against Paxos for violation of investors protection laws.