Paypal
Paypal

PayPal launches US dollar pegged stablecoin

What To Know

  • Nearly three years after PayPal introduced support for cryptocurrency across all US accounts, the fintech firm has now unveiled its own stablecoin, which is tied to the value of the US dollar.
  • The company’s decision to develop its stablecoin was initially hinted at in January of the previous year, when a developer discovered code and visuals related to a “PayPal Coin” within the app.
  • Industry experts, like Ian Katz, the Managing Director of Capital Alpha Partners, suggest that the introduction of PayPal USD may attract the attention of regulatory bodies such as the Federal Reserve and the Securities and Exchange Commission.
  • For now, Company’s primary focus is on the gradual rollout of the new digital currency and the various use cases it will offer within the United States.

Nearly three years after PayPal introduced support for cryptocurrency across all US accounts, the fintech firm has now unveiled its own stablecoin, which is tied to the value of the US dollar. Known as PayPal USD, this digital currency is fully backed by US dollar deposits, short-term US Treasuries, and equivalent cash assets.

The company’s decision to develop its stablecoin was initially hinted at in January of the previous year, when a developer discovered code and visuals related to a “PayPal Coin” within the app. At that time, PayPal indicated its willingness to collaborate with regulatory bodies when considering further actions.

PayPal Unveils Its Own Stablecoin: USD Tied to the US Dollar Value

According to the announcement, PayPal’s stablecoin operates as a token on the Ethereum blockchain and is issued by the Paxos Trust Company.

This issuance is subject to the oversight of the New York State Department of Financial Services. In preparation for this venture, Company secured a BitLicense, a virtual currency activity business license, from the NYDFS in June 2022.

Users have the ability to buy and sell USD coins for a value of $1 each. These coins can be sent to other users for transactions or used as a payment method for goods and services during the checkout process.

Furthermore, users can transfer PayPal USD to compatible external wallets and convert other cryptocurrencies within their account to and from the stablecoin.

As highlighted by Reuters, prior attempts by major corporations to introduce their own stablecoins were met with regulatory roadblocks. Notably, Meta (formerly Facebook) spent two years endeavoring to launch its stablecoin, a project that ultimately faced repeated delays due to concerns from regulators about potential misuse for illicit activities such as money laundering.

Industry experts, like Ian Katz, the Managing Director of Capital Alpha Partners, suggest that the introduction of PayPal USD may attract the attention of regulatory bodies such as the Federal Reserve and the Securities and Exchange Commission.

For now, Company’s primary focus is on the gradual rollout of the new digital currency and the various use cases it will offer within the United States.

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