PayPal launched the stablecoin on August 4th, 2023, and named PayPal USD (PYUSD) which is issued by the Paxos Trust Company. This stablecoin is mainly backed by deposits in U.S. dollars. By launching their stablecoin, PayPal aims to restructure the payment in Web3 and digitally native environments.
PayPal’s stablecoin is available to its customers all around the United States. After PayPal’s announcement about their offering of stablecoin, their market share increased about by 2.7% on the day of their announcement. Regulatory challenges and high-profile collapses of cryptocurrencies generate a troubled situation for this sector. However, because of PayPal’s initiative, it generates confidence in the troubled cryptocurrency industry.
Many mainstream companies have attempted to launch the stablecoins but they have faced opposition from financial policymakers and regulators. In 2019, Facebook’s plans to launch the stablecoin (Libra) failed due to their concern about its impact on global financial stability. Due to this restraint, major economies like the European Union and Britain started the implementation of regulations to govern the stablecoins. For the same purpose, the EU’s policies will take effect in June 2024.
After existing for several years, stablecoin has struggled to gain traction in the mainstream consumer payments ecosystem. Instead, to trade cryptocurrencies like Bitcoin and Ether consumers primarily use stablecoin. Tether is the largest stablecoin all around the globe followed by USD Coin which is issued by crypto provider Circle.
PayPal does not generate controversy like Facebook because its prominent reputation will undoubtedly attract attention from Capitol Hill, as well as regulatory bodies such as the Federal Reserve and Securities and Exchange Commission. According to Ian Katz, managing director of Capital Alpha Partners predicts that PayPal’s move will be closely monitored by these entities.
Representative Patrick McHenry, the Republican chair of the committees, who made the statement on the 4th of August 2023, highlighted that PayPal’s recent announcement is a clear indication of the potential of stablecoins as a fundamental component of PayPal’s modern payment system.
Paxos Trust Company which issued the PayPal USD made an announcement on Twitter which is now known as Platform X that PYUSD is the first stablecoin of its kind which represents the next phase of the U.S. dollars on the blockchain. This achievement is significant for Paxos, PayPal, and the entire financial industry.