PayPal launches its stablecoin, Paypal USD, pegged to the dollar.

• Paypal, a digital payment platform, has just launched its US-dollar-pegged stablecoin dubbed PayPal USD.
• The company is optimistic that the future will have digital currencies mainstream, and traders may require payment in stablecoins to avoid credit card processing fees.
• PayPal and Paxos share a commitment to drive responsible innovation at scale, expand the accessibility and utility of digital currencies, and the potential of cryptocurrencies to shape the future of the global financial system.

PayPal, a digital payment platform, has just launched its US-dollar-pegged stablecoin dubbed PayPal USD. The stablecoin will allow customers to transfer PayPal USD between digital wallets, facilitate P2P transactions, fund purchases and convert any of PayPal’s supported cryptocurrencies to and from the stablecoin.

PayPal USD is backed by US dollar deposits, cash equivalents, and short-term Treasuries. Like most USD-backed stablecoins (Tether, USDC, BUSD, GUSD, and TrueUSD), it is redeemable to the US dollar at 1:1. The digital payment platform intends to capitalize on the emerging potential of USD-backed digital tokens for consumer payments.

PayPal partners with Paxos Trust Company

PayPal is partnering with Paxos Trust Company, a fintech based in New York, to issue PayPal USD (PYUSD) digital coin. According to PYPL, the stablecoin will be compatible with the ecosystem from day one and will be available soon on Venmo, a popular payments app owned by PayPal.

“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar,” said Dan Schulman, PayPal’s president and CEO.

“With the launch of PYUSD, Paxos and PayPal are proving the real-world value of blockchain technology,” said Paxos CEO Charles Cascarilla said… “The new token is the most significant leap forward for digital assets and the financial industry.”

The use cases of PayPal USD appear limited to crypto-related and other web3 applications. However, the company is optimistic that the future will have mainstream digital currencies. As such, traders may require payment in stablecoins to avoid credit card processing fees.

Read: Paypal introduces cryptocurrency payments to encourage adoption

The value of Stablecoins

Stablecoins’ design states they should maintain a stable value redeemable to the dollar’s value in a 1:1 ratio. Their advantage to cryptocurrencies is that they are less volatile. As such, they are more friendly to trade.

Most stablecoins are tagged to a strong fiat currency (US dollar) or a valuable commodity (gold). They are also more on-ramp, allowing investors to quickly cash out their crypto holdings for liquid money.

However, stablecoins have proven not to be as stable in recent times. Mid-last year, TerraUSD collapsed after the crypto token backing it (LUNA) dumped to zero. The crash wiped away over $40 billion from the crypto market. The future of stablecoins is not as independent as governments seek to tighten regulations toward digital currencies.

There seems to be a common goal between PayPal and Paxos. This is not the first partnership the two companies have had to influence change in the crypto market.

PayPal partners with Paxos to build crypto products

In 2020, PayPal allowed its US users to buy, sell and hold cryptocurrencies on their platform. In a Partnership with Paxos, the company launched a ‘Checkout with Crypto’ alongside other payment methods in the PayPal wallet.

Checkout with Crypto offers a business’ customers a way to checkout with cryptocurrency without any additional fees charged to the company. Transactions are settled in USD and converted to the applicable currency for the business at PayPal conversion rates.

PayPal and Paxos share a commitment to drive responsible innovation at scale, expand the accessibility and utility of digital currencies, and the potential of cryptocurrencies to shape the future of the global financial system.

Read: Paypal Cryptocurrency a success, holding a whopping US$604 million worth of crypto assets

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• Source: https://web3africa.news/2023/08/08/news/paypal-launches-its-stablecoin-paypal-usd/