PayPal (PYPL.O), the world’s largest online payment service, announced on Monday the introduction of a U.S. dollar stablecoin, making it the first major financial technology company to accept digital currencies for payments and transfers. Shares of PayPal rose 2.66 percent on Monday after the news, reflecting optimism in the struggling cryptocurrency sector, which has spent the last year dealing with regulatory obstacles and the fallout from a series of high-profile failures.
“a part of the overall payments infrastructure,” as PayPal CEO Dan Schulman put it to Bloomberg, is the goal for the dollar-pegged stablecoin issued by Paxos Trust Co. According to the official PayPal release, the USD (PYUSD) currency is backed by dollar deposits, short-term treasuries, and cash equivalents. The token will be an ERC-20 token on the Ethereum blockchain. PayPal, then its famous Venmo app, will support PYUSD first.
Paxos 🤝 PayPal
— Paxos (@Paxos) August 7, 2023
Thrilled to be partnering with @PayPal to bring PYUSD, the world’s safest dollar-backed digital asset, to hundreds of millions of consumers and merchants worldwide.
PYUSD is the first of its kind, representing the next phase of US dollars on the blockchain. This…
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. 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.
PayPal CEO Dan Schulman
Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves. Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets.
PayPal said in its release
Eligible residents of the United States will soon be able to use the stablecoin to make purchases from participating merchants, send and receive payments inside the PayPal ecosystem, and convert between PayPal USD and the other cryptocurrencies accepted by PayPal.
