PayPal Launches New Ethereum-Based Stablecoin
- PayPal USD (PYUSD) will be issued by Paxos and the Ethereum blockchain, and is backed by U.S. dollar deposits, short-term Treasuries, and similar cash equivalents.
- The company said the stablecoin can be redeemed for U.S. dollars at all times, and exchanged for any other crypto supported by the platform, including BTC, ETH, BCH, and LTC.
PayPal logo and sign in front of PayPal Holdings headquarters building in North San Jose Innovation District in Silicon Valley, San Jose, California, USA, 17 March, 2019. Michael Vi/Shutterstock
Payments giant PayPal has become the first major financial company to launch its own dollar-pegged stablecoin, called PayPal USD (PYUSD), the company said in a press release on 7 August.
According to the announcement, the new stablecoin is issued on the Ethereum blockchain by Paxos Trust Co., and is fully backed by U.S. dollar deposits, short-term Treasuries, and similar cash equivalents. Although it was released on Monday, PYUSD — which was “designed for digital payments and Web3 — will be “gradually” made available to PayPal customers in the U.S. in the coming weeks.
The popular payments company said that users will be able to transfer PYUSD between PayPal accounts and supported external wallets, exchange the stablecoin for other cryptocurrencies supported by the platform, as well as redeem PYUSD for U.S. dollars at all times. PayPal also claimed that the new ERC-20 token will soon be available as a payment option for various purchases at checkout.
The payments giant also said it will start issuing a public monthly reserve reports for the stablecoin from September 2023 in order to combat any concers about the backing of the token. Paxos will also start publishing attestation — which will be issued by an “independent third-party accounting firm” — of the value of the PYUSD reserve assets.
PayPal made it possible for its U.S. customers to use various cryptocurrencies — including Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) — at checkout in March 2021. The company confirmed that it is developing an in-house stablecoin back in January 2022, though at the time it was rumored that the token would be called “PayPal Coin”, and claimed it would work closely with relevant regulators before its launch.
- Canadian customers who have no funds in their Paxos accounts will have their accounts automatically closed on 9 May, while the rest will be disabled on 2 June.
- Paxos is not the only company to be leaving Canada, with cryptocurrency exchanges dYdX and OKX saying they will wind down their businesses in the country due to “new regulations”.
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- Both crypto exchange Coinbase and stablecoin issuer Paxos have stated that they will no longer accept or initiate U.S. dollar payments through Silvergate Bank.
- The two noted that cash transactions for institutional clients will now be carried out through their other banking partners, and that the move had no impact on pound and euro payments.
- The new funding will help Chaos Labs build out and expand its suit of risk and security products that can help DeFi protocols.
- The seed funding round was co-led by PayPal and Galaxy Digital, but also saw participation from including Coinbase Ventures, Polygon, Avalanche, OpenSea, Uniswap, and others.