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Breaking: PayPal Launches Stablecoin PYUSD

On August 7, 2023, PayPal (NASDAQ: PYPL) announced the launch of a U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), aimed at transforming payments in web3 and digitally native environments. The announcement was made in San Jose, California, and marks a significant step in bridging the gap between fiat and digital currencies.

PayPal USD: Features and Functionality

PayPal USD is designed to contribute to the opportunities that stablecoins offer for payments. It is 100% backed by U.S. dollar deposits, short-term U.S Treasuries, and similar cash equivalents. The stablecoin is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company.

Starting from the announcement date and rolling out in the coming weeks, eligible U.S. PayPal customers who purchase PayPal USD will be able to:

Transfer: PayPal USD between PayPal and compatible external wallets.

Send: person-to-person payments using PYUSD.

Fund purchases: with PayPal USD by selecting it at checkout.

Convert: any of PayPal’s supported cryptocurrencies to and from PayPal USD.

PayPal’s CEO, Dan Schulman, emphasized the need for a stable instrument that is digitally native and easily connected to fiat currency like the U.S. dollar, stating, “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.”

Profit of Stablecoin

Stablecoins have proven to be quite profitable, and PayPal’s entry into this market is indicative of its potential. According to Tether, the issuer of USDT, its operational profits for April to June 2023 are over $1 billion, marking a 30% increase quarter over quarter.

As a traditional payment giant, PayPal can hardly ignore the huge market of stablecoin, and its launch of PayPal USD reflects a strategic move to capitalize on this growing and lucrative sector.

Building Bridges: Fiat and Web3

PayPal USD will be available to consumers, merchants, and developers to seamlessly connect fiat and digital currencies. As an ERC-20 token issued on the Ethereum blockchain, PayPal USD will be accessible to a large and growing community of external developers, wallets, web3 applications, and exchanges.

The stablecoin is designed to reduce friction for payments in virtual environments, facilitate fast transfers of value, enable direct flows to developers and creators, and foster continued expansion into digital assets by major brands. It will be compatible with the web3-specific ecosystem from day one and will soon be available on Venmo.

Transparency and Regulation

PayPal USD is issued by Paxos Trust Company, a fully licensed entity subject to regulatory oversight by the New York State Department of Financial Services. In June 2022, PayPal was issued a BitLicense by NYDFS.

Reserves for PayPal USD are fully backed by U.S. dollar deposits, U.S. Treasuries, and similar cash equivalents. Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD, outlining the instruments composing the reserves. A third-party attestation of the value of PayPal USD reserve assets will also be issued by an independent accounting firm, conducted in accordance with standards established by the American Institute of Certified Public Accountants (AICPA).

Conclusion

PayPal’s launch of its U.S. dollar stablecoin marks a significant milestone in the integration of traditional finance with the emerging digital economy. By providing a transparent, redeemable, and regulated stablecoin, PayPal is positioning itself at the forefront of the digital payment revolution, leveraging its decades-long experience in payments to bridge the gap between fiat and web3. The introduction of PayPal USD reflects the growing trend of financial institutions embracing blockchain technology and digital assets, offering new possibilities for consumers, merchants, and developers alike.

Gemini's Weekly Update: PayPal Launches PYUSD Stablecoin, Coinbase Unveils Base Layer-2, and Aptos Announces Microsoft Partnership

In Gemini’s latest “Weekly Market Update” released on August 11, 2023, several significant developments were highlighted in the cryptocurrency industry, marking a week filled with innovation and collaboration.

As of Friday, August 11, 2023, PayPal has become the first significant US financial firm to introduce its own US dollar-backed stablecoin, PayPal USD (PYUSD). The extension of PayPal’s crypto services, which currently include trading in Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC), includes this latest addition.

Stablecoins are now the “killer application” for blockchain, according to PayPal Senior Vice President and General Manager of Blockchain, Crypto, and Digital Currencies Jose Fernandez da Ponte, and are “something we cannot just sit out.”

Other Notable Market Updates

Inflation for July 2023 Was Lower Than Expected: Inflation for July 2023 was lower than expected, with both the headline and core consumer price statistics recording a minor rise of 0.2%. This results in annual increases for the corresponding categories of 3.2% and 4.7%. Market experts predict that interest rates will likely stay steady for the rest of the year as a result of the lower inflation statistics.

Coinbase’s Base Layer-2 Network Goes Live: Coinbase launched its Ethereum layer-2 network, Base, to the general public, with data showing $175 million USD locked on the blockchain as of Friday. This follows Coinbase’s better-than-expected second quarter earnings of $708 million USD in revenues.

Aptos Surges on Microsoft Partnership: Aptos (APT), a layer-1 proof-of-stake blockchain, saw a ~15% surge in price on Wednesday after announcing a partnership with Microsoft to work on AI and web3 products and services. The collaboration will leverage Microsoft’s Azure OpenAI services.

Bitcoin and Ether Continue Range Bound: Bitcoin traded in the $29k to $30k USD range for the second week, possibly boosted by PayPal’s stablecoin launch. Ether has been struggling to move back above its 100-day moving average of $1,850 USD.

Crypto Custody Explained

The update also touched on the importance of crypto custody, outlining different options for investors, including self-custody via private keys, partial custody with third-party assistance, and third-party digital asset custody. The latter offers high levels of security and is suitable for individual and institutional investors.

Kraken Announces PayPal USD (PYUSD) Trading Starting August 21

Kraken, a prominent cryptocurrency exchange, has announced the inclusion of a new financial instrument to its platform. Starting August 21, Kraken will support trading for PayPal USD (PYUSD), a significant move that encapsulates the melding of traditional and digital financial systems.

The decision by Kraken follows the unveiling of PYUSD by payment giant PayPal, marking another step in the adoption and integration of stablecoins in major exchanges.

PayPal’s Foray into the Stablecoin Realm

On August 7, 2023, in San Jose, California, PayPal (NASDAQ: PYPL) took a significant step in digital finance with the launch of its U.S. dollar-denominated stablecoin, PayPal USD (PYUSD). This digital currency is designed to reshape payments in web3 environments and other digitally native settings.

Features and Functionality

PayPal USD’s design prioritizes the benefits stablecoins bring to payments. Ensured by a 100% backing through U.S. dollar deposits, short-term U.S Treasuries, and similar cash equivalents, this stablecoin promises a 1:1 redemption rate for U.S. dollars. Issued by Paxos Trust Company, it provides the following functionalities:

Transfer PYUSD between their PayPal accounts and compatible external wallets.

Conduct person-to-person payments using PYUSD.

Fund purchases at checkout using PYUSD.

Convert between PayPal-supported cryptocurrencies and PYUSD.

Highlighting the importance of this new asset, PayPal CEO, Dan Schulman, stated, “Our commitment to responsible innovation and compliance, along with our history of pioneering unique experiences for our clientele, is the groundwork for digital payments growth via PayPal USD.”

Stablecoins’ Growing Profitability:

Stablecoins, as underscored by Tether’s impressive Q2 2023 operational profit of over $1 billion, continue to etch a significant and profitable place in the financial domain. PayPal’s entry indicates the vast potential this sector holds.

Blending the Worlds of Fiat and Web3

PayPal USD aims to be more than just another stablecoin. It aspires to be a conduit, connecting the traditional world of fiat to the dynamic realm of web3. Built as an ERC-20 token on the Ethereum blockchain, it is designed to be accessible to a diverse range of developers, web3 apps, wallets, and exchanges.

The coin’s design intends to diminish payment friction in virtual landscapes, expedite transfers, and establish direct financial conduits for developers and creators. Moreover, its integration with the web3 ecosystem ensures its compatibility with platforms like Venmo from day one.

Transparency and Regulation

Ensuring credibility and trust, Paxos Trust Company, under the regulatory eye of the New York State Department of Financial Services, issues the PayPal USD. Furthermore, from September 2023, Paxos will roll out a monthly Reserve Report detailing the reserves underpinning the stablecoin. An independent accounting firm will provide third-party attestation, in line with the guidelines set by the American Institute of Certified Public Accountants (AICPA).