According to CoinDesk, Tether co-founder William Quigley believes that PayPal's recent entry into the stablecoin market with its PYUSD token is driven primarily by potential cost savings on multicurrency transactions, rather than innovation. Quigley, who is also an investor in PayPal, stated that the company has been exploring stablecoins for seven or eight years, with the goal of reducing costs associated with financial intermediaries in the payments industry.
By creating a stablecoin, PayPal can hold a basket of currencies in banks worldwide and tokenize the currency backed by those deposits. This creates a private, multicurrency money supply that exists outside the global banking system, eliminating the need for third-party toll collectors. As a result, PayPal can settle transactions between different currencies without relying on financial institutions, reducing or eliminating fees associated with currency conversion.
Quigley suggested that PayPal could either continue to charge consumers and merchants currency conversion fees and retain 100% of those fees as profit, or eliminate the fees and lower overall cross-border transaction costs. He also noted that large stablecoin operators today, such as Tether, can earn significant yields on their reserves due to interest-rate increases in recent years, a potential revenue source he did not foresee when founding Tether.
