- Paypal launched its own stablecoin – PYUSD, backed by the US dollar, treasury bills and cash equivalents
- The coin will be issued by Paxos, the same company that issued BUSD, which was later labeled a safety by the SEC
PayPal, an online payments giant, announced its entry into the digital currency market with its own stablecoin – PayPal USD [PYUSD]. The currency is pegged to the dollar and backed by dollar deposits, short-term US Treasury bonds and cash equivalents. Notably, the stablecoin will be issued by Paxos Trust Company, the same company that issued Binance stablecoin [BUSD]. The press release read,
“PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate rapid transfers of value to support friends and family, send remittances or make international payments, enable direct flows to developers and creators and the continued expansion into digital assets from the world’s biggest brands.”
In addition, the stablecoin will be an ERC-20 token, leveraging the security provided by the Ethereum blockchain. And it will initially be available to eligible US customers and can be used between PayPal and other compatible wallets. The company also stated that the stablecoin will be available on Venmo, another US payment services company.
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In addition, starting September 2023, the company will release its reserve report for PYUSD, detailing the reserves. The report will also include a third party statement on the value of the reserves. This is issued by a company that meets the standards of the American Institute of Certified Public Accounts (AICPA).
Paypal’s PYUSD had ties to the bankrupt FTX
In particular, news about PayPal’s stablecoin rate has been circulating in the news since last year. More so, the coin was supposed to be unveiled in 2022, but it ran into several hurdles, including regulatory roadblocks. According to the latest development, the company initially planned to partner with FTX – now collapsed crypto exchange.
In addition, it was also intended to be launched on the Solana blockchain, it said Wu Blockchain. However, this plan went downhill after FTX went bankrupt in November 2022.
In addition, PayPal’s partner for PYUSD – Paxos was in the spotlight a few months ago for issuing BUSD – a Binance stablecoin. The coin was designated as a security by the U.S. Securities and Exchanges Commission [SEC]. This resulted in Paxos stopping issuance of the coin and subsequently led to its suspension on exchanges.
Since the shutdown announcement, the company has saw over $7 billion BUSD is withdrawn within 30 days. The company had also stated that it would oppose the regulator to protect BUSD’s status.