PayPal has unveiled a new stablecoin pegged to the US dollar, marking a significant step in the digital asset domain by a major US financial firm. This revelation comes after the company began offering crypto services in 2021, facilitating the buying, selling, and holding of prominent cryptocurrencies like bitcoin and ether.
This novel stablecoin, christened PayPal USD, is being issued in collaboration with Paxos Trust Co. Starting Monday, users will have the option to buy, send, convert, and utilize the stablecoin for transactions in the forthcoming weeks. Further enhancing its usability, customers can transfer PayPal USD between PayPal and other compatible external wallets, and even use it for making purchases via PayPal.
A unique aspect of this development is the monthly Reserve Report on the stablecoin that will be released by Paxos, in addition to an attestation detailing the value of the reserves backing PayPal USD. The stablecoin pledges full backing through U.S. dollar deposits, US Treasuries, and similar liquid assets.
Charles Cascarilla, CEO of Paxos, expressed immense pride in their association with this groundbreaking product. He stated, “PayPal USD signifies a monumental advancement in digital assets and the broader financial domain.”
PayPal’s foray into the digital currency realm with PayPal USD, minted as an ERC-20 token on the Ethereum blockchain, is rooted in its commitment to “responsible innovation and compliance,” as emphasized by Dan Schulman, PayPal’s CEO. Schulman added that the digital era demands stable instruments that seamlessly integrate with traditional fiat currencies.
Highlighting the significance of clear legal frameworks, Patrick McHenry, chair of the House Financial Services Committee, underscored the necessity for Congress to legislate comprehensive digital asset regulations, especially for stablecoins.
This move closely follows PayPal’s decision to activate crypto transactions for Venmo users a few months prior.