PayPal's Move to Stablecoins: A Savior for Crypto?

Isha000

Last week, Paypal, often referred to as the "U.S. Alipay," announced the issuance of the stablecoin PaypalUSD, abbreviated as "PYUSD," causing another stir in the cryptocurrency field. Paypal, as the largest third-party payment institution in the United States, issued a stablecoin amidst increasing SEC regulations, which has raised speculation about their motives. Given that their stablecoin is issued on Paxos, it's worth noting that earlier in February, due to an SEC lawsuit, Binance urgently delisted their stablecoin BUSD, which was a collaboration with Paxos.

From an industry perspective, many individuals have high hopes for Paypal, believing that the entry of large institutions could potentially lay the foundation for regulatory relaxation. However, behind the issuance, the myths of centralization and limited use cases loom.

Speculation sparked by Paypal continues to grow.

A Lifesaver: The Past and Present of PYUSD
On August 8, 2023, the American payment giant Paypal officially announced the launch of its stablecoin, PYUSD, becoming the first traditional large financial institution in the United States to issue a stablecoin.

According to the official description, PYUSD is issued in collaboration between Paxos Trust Company and Paypal and is pegged 1:1 to the U.S. dollar. To ensure its solvency, similar to Tether, PYUSD is fully collateralized by U.S. dollars, short-term U.S. government bonds, cash, and cash equivalents. Paxos will begin publishing monthly public reserves reports of Paypal dollars from September 2023, detailing their reserve details. Paxos will also commission an independent third-party accounting firm to provide public assurance of the value of PYUSD reserve assets, conducting periodic audits in accordance with the auditing standards established by the American Institute of Certified Public Accountants (AICPA) to ensure the security and integrity of its assets.

In terms of practical use cases, PYUSD supports the conversion of U.S. dollars to other cryptocurrencies, including but not limited to transferring in compatible wallets, peer-to-peer stablecoin payments, and PYUSD payments in real-world scenarios. This stablecoin will initially be used on Paypal and will later be expanded for small payment program Venmo, with gradual extensions to other applications. Currently, this currency is only available to U.S. users, but since it is issued on the Ethereum blockchain, it is open to developers, wallet providers, and the Web3 community.

It is worth noting that, to avoid the risk of Paxos being accused of issuing unregistered securities, Paypal has publicly stated that it will not provide profits to users of the PYUSD stablecoin. Typically, Paypal deposit rates are around 4.3% at most.

For those not very familiar with Paypal, it might be surprising to see their sudden entry into the market. However, as early as ten years ago, Paypal was already paying attention to cryptocurrencies.

Jafar224

Stablecoins are also crucial now.

Jatin255

Many people are using USDT (Tether) these days.

Jiger955

The founder of Binance is very influential.