PayPal to Issue Dollar-Pegged Crypto Stablecoin Based on Ethereum – On Monday, PayPal, the renowned global payment company, revealed its entry into the cryptocurrency market by introducing its own stablecoin called PayPal USD (PYUSD). This Ethereum-based token, pegged to the U.S. dollar, will soon be accessible to PayPal users within the United States.
Remarkably, this marks the first instance of a major financial institution issuing its own stablecoin. Users will have the ability to transfer PYUSD between their PayPal accounts and compatible external wallets, utilize it for purchasing goods and services, or convert it to and from any of PayPal’s supported cryptocurrencies.
PayPal said the stablecoin will be available to an “already large and growing community of external developers, wallets and web3 applications,” and can be easily adopted by crypto exchanges. PYUSD, which is backed by US dollar deposits, short-term Treasuries, and equivalent cash reserves, is issued by Paxos Trust, a crypto financial services company based in New York.
This stablecoin is always redeemable for US dollars and can be exchanged for various other cryptocurrencies supported on PayPal’s network, including bitcoin (BTC), bitcoin cash (BCH), ether (ETH), and litecoin (LTC). “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” said Dan Schulman, president and CEO of PayPal, in a press statement.
“Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.” Initially, PYUSD will be accessible through Venmo, PayPal’s widely-used payments app.
Additionally, PayPal has committed to offering verified reports detailing the funds securing the stablecoin, aiming to address any apprehensions regarding the issuance of unbacked tokens. “Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves,” the firm said in a release.
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“Paxos 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 attestation standards established by the American Institute of Certified Public Accountants (AICPA),” it added.