“Issued by Paxos as an ERC-20 token on Ethereum, what are the uses and features of PayPal’s USD stablecoin?”
Last night, PayPal launched the US dollar stablecoin PayPal USD (PYUSD) for transfers and payments. PYUSD is issued by Paxos Trust Company and is 100% backed by US dollar deposits, short-term US Treasury bonds and similar cash equivalents.
Starting today and rolling out gradually over the coming weeks, eligible U.S. PayPal customers who purchase PYUSD will be able to:
Transfer PYUSD between PayPal and compatible external wallets;
Use PYUSD for peer-to-peer payments;
Select PYUSD at checkout;
Convert PayPal supported cryptocurrencies to and from PayPal USD.
As PayPal President and CEO Dan Schulman said: “The shift to digital currency requires a stable instrument that is both digitally native and easily connectable to fiat currencies like the U.S. dollar.”
01 Build a seamless channel between fiat currency and Web3
PayPal USD creates a seamless bridge between fiat and digital currencies for consumers, merchants, and developers. Combining PayPal's decades of experience in large-scale payments with the advantages of blockchain, PayPal USD, as a unique stablecoin in its network, guarantees efficiency and programmability.
This Ethereum-based ERC-20 token is not only accessible to external developers, wallets, and the Web3 community, but is also easily accepted by exchanges, providing an enhanced experience for PayPal users.
PayPal USD aims to reduce friction in virtual payments, facilitate cross-border transfers and remittances, and ensure that funds flow directly to developers and creators. It is perfectly compatible with the Web3 ecosystem from the day it is launched and will be available on Venmo soon.
02 Stable, transparent and pegged to the US dollar
PayPal USD is issued by Paxos Trust Company, which is regulated by the New York State Department of Financial Services. In 2022, PayPal obtained the BitLicense from NYDFS after obtaining the conditional BitLicense.
Each PayPal USD is fully backed by USD deposits, U.S. Treasuries, and cash equivalents. Users can buy or sell PayPal USD at a 1:1 ratio through PayPal.
Starting in September 2023, Paxos will publicly publish monthly PayPal USD reserve reports and will also publish a public third-party attestation of the value of PayPal USD reserve assets. The attestation will be issued by an independent third-party accounting firm and conducted in accordance with the attestation standards established by the American Institute of Certified Public Accountants (AICPA).
03 Enhance the awareness and application of digital currency
PayPal is not only focused on developing products and services that enhance the applicability of digital currencies, but is also committed to increasing consumers and merchants’ awareness of cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). As the industry continues to advance, PayPal maintains close collaboration with regulators.
It is particularly noteworthy that in addition to providing PayPal USD services to account users in the United States, PayPal also enables customers to buy, hold, sell and transfer a variety of mainstream cryptocurrencies. In order to better guide users, PayPal also provides rich educational content to help them gain a deeper understanding of the knowledge and potential risks in this field.
04 PayPal's issuance of stablecoins has attracted the attention of US regulators
In addition to comments from industry insiders, PYUSD has also attracted the attention of U.S. regulators. Patrick T. McHenry, chairman of the House Financial Services Committee, said in a recent statement that PayPal's issuance of a stablecoin is a clear signal that it has the potential to become a pillar of the 21st century payment system:
(The emergence of PYUSD) is a clear signal that stablecoins, if issued under a clear regulatory framework, have the potential to become the backbone of our 21st century payment system.
At the same time, Patrick also called on the U.S. Congress to complete the legislation of stablecoins as soon as possible to maintain the United States' first-mover advantage in the financial system:
We are at a crossroads in keeping the United States at the forefront of digital asset innovation. Congress is making significant bipartisan progress on legislation to ensure that the United States leads the financial system of the future, and we must finish the work.
Alpha says
PayPal recognizes the potential of stablecoins to revolutionize payments in Web3 and native digital ecosystems, and introduces PYUSD.
Alpha Investment Research believes that this dollar-pegged stablecoin is poised to bridge the gap between traditional fiat currencies and the growing world of digital assets.
The creation of Web3 is inseparable from the support of Web2.
✏️Disclaimer: This article is for reference only and does not constitute investment advice.
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