PayPal Inc.’s United States dollar-pegged stablecoin, PayPal USD (PYUSD), has crested $1 billion in total market capitalization, according to data from CoinMarketCap.
Launched in 2023, PYUSD is backed 1:1 by US dollars and is issued by Paxos Trust Company, a US-regulated crypto custodian. It competes with other regulated, dollar-backed stablecoins such as Circle Internet Financial’s US Dollar Coin (USDC.)
"The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar," said Dan Schulman, PayPal’s president and CEO, in a 2023 statement.
An Ethereum-compatible ERC-20, PYUSD is the only stablecoin supported on PayPal’s payment rails. It is designed to be “available to an already large and growing community of external developers, wallets and Web3 applications” and easily onboarded by cryptocurrency exchanges, PayPal said.
PYUSD still lags leading stablecoins USDT and USDC. Source: CoinMarketCap
PayPal has been taking steps to expand PYUSD’s accessibility, including working with Anchorage Digital to launch a rewards program for clients who custody PayPal USD stablecoins with the crypto custodian.
In May, PayPal launched PYUSD on Solana, partnering with Crypto.com, Phantom, and Paxos to onramp users onto the blockchain network, according to an announcement.
It also partnered with Web3 infrastructure provider MoonPay to buy cryptocurrency using a PayPal account, PayPal said. That partnership extended to onramping users to crypto betting platform Polymarket in July.
Coinbase — which also has an institutional custody arm — is also incentivizing users to hold stablecoins on its platform. It currently offers approximately 5.2% annual percentage yield on USDC. Coinbase owns an equity stake in Circle.
Despite its recent successes, PYUSD still greatly lags behind dollar-pegged stablecoins Tether (USDT) and USDC. According to data from CoinMarketCap, the two leading stablecoins command market capitalizations of nearly $118 billion and $35 billion, respectively.
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