Digital Assets: PayPal Is The First Major Finance Company In The USA To Issue A Stablecoin
The stablecoin, dubbed Paypal USD (PYUSD), will be issued by the Paxos Trust and backed 100% by US Dollars or cash equivalents.
PayPal (NASDAQ: PYPL) has introduced a stablecoin called PayPal USD (PYUSD), which is backed by U.S. dollar deposits, short-term U.S. treasuries, and similar cash equivalents. The stablecoin can be redeemed 1:1 for U.S. dollars. This move is aimed at harnessing the potential of stablecoins in web3 and digital native environments. PayPal USD is designed for digital payments and Web3 compatibility and will be accessible on various platforms.
It is issued by Paxos Trust Company and will be usable for transfers, person-to-person payments, funding purchases, and cryptocurrency conversions. The stablecoin is meant to bridge the gap between fiat and digital currencies, allowing seamless connections for consumers, merchants, and developers. It’s built on the Ethereum blockchain as an ERC-20 token, which ensures its compatibility with various web3 applications.
PayPal’s dedication to responsible innovation and adherence to compliance form the foundation of its pledge to enhance the expansion of digital payments through PayPal USD. The stablecoin’s reserves are entirely supported by U.S. dollar assets, the company said, and it will uphold a transparent reporting mechanism to guarantee the integrity of its reserve value.
Starting from September 2023, Paxos will release a monthly public Reserve Report for PayPal USD, detailing the components of the reserves. Additionally, Paxos will provide a public third-party validation of the value of PayPal USD reserve assets. This validation will be carried out by an independent accounting firm, following the attestation standards set by the American Institute of Certified Public Accountants (AICPA).
Additionally, PayPal is striving to enhance public understanding and adoption of cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) while collaborating with regulators. Apart from offering PayPal USD for U.S. account holders, PayPal provides educational resources about cryptocurrency risks and possibilities.
Related Story: NAB Launches AUDN, A Stablecoin Backed By The Australian Dollar
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