Payments giant PayPal is launching its own stablecoin, and the move has got both traditional fintech players as well crypto firms excited. Dubbed ‘PYUSD,’ the stablecoin is built on Ethereum and is 1:1 redeemable for US dollars. The move essentially marked the first such move from a major financial institution in the United States. While PayPal briefly stopped working on its stablecoin a few months ago amid tightening regulatory scrutiny of crypto, the subsequent announcement is being touted to be a “bold move” by several industry experts, given the hostile regulatory climate in the US. Expert’s Take on PayPal’s New Stablecoin The main objective of PayPal USD is to eliminate friction for in-experience payments in virtual environments by facilitating fast transfers of
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Payments giant PayPal is launching its own stablecoin, and the move has got both traditional fintech players as well crypto firms excited. Dubbed ‘PYUSD,’ the stablecoin is built on Ethereum and is 1:1 redeemable for US dollars. The move essentially marked the first such move from a major financial institution in the United States.
While PayPal briefly stopped working on its stablecoin a few months ago amid tightening regulatory scrutiny of crypto, the subsequent announcement is being touted to be a “bold move” by several industry experts, given the hostile regulatory climate in the US.
Expert’s Take on PayPal’s New Stablecoin
The main objective of PayPal USD is to eliminate friction for in-experience payments in virtual environments by facilitating fast transfers of value, sending remittances, or conducting international payments. It is also designed to allow direct flows to developers and creators and boost the continued expansion into digital assets by the largest brands in the world.
With 400 million active accounts and a dominant 50% share in the online payments market, PayPal possesses the influence to reshape the discourse. This prospect has sparked excitement among both crypto leaders and its rivals alike.
In a statement, Tether’s CTO Paolo Ardoino “welcomed” PayPal to the stablecoin industry and said,
“We all have the shared goal of driving stablecoin adoption and innovation and competition leads to the development of solutions that enhance the overall ecosystem. Each project strives to differentiate itself by providing unique benefits to users, driving innovation, and providing users with more choices and control over their transactions. Fostering competition allows a healthy and diverse market environment.”
However, the current regulatory uncertainty surrounding digital assets in the US cannot be deemed conducive for such a project. It’s worth noting that social media giant Meta ultimately scrapped its intention to introduce its own stablecoin, Diem, last month due to regulatory backlash. Hence, Keyrock co-founder and CEO Kevin de Patoul believes PYUSD’s launch to be “bold.”
In a comment to CryptoPotato, the exec said,
“Overall, this launch underscores the ongoing momentum in the digital asset space, reaffirming the logic behind fully digital means of exchange. There’s no doubt that the growth and development of digital assets is expected to continue.”
The Keyrock boss also said that the entry of an established mainstream financial institution taking the step to launch its own stablecoin takes a “strong conviction” in such a regulatory climate. However, Patoul emphasized the importance of monitoring the distribution of PYUSD to ensure that it can be used outside of the PayPal/Venmo ecosystem and reach a wider audience. He said,
“This is necessary to prevent it from becoming just another purely internal currency and make it an actual catalyst for the mainstream adoption of digital assets.”
Stablecoin Adoption
Web3 market observers have brought forth apprehensions regarding the fundamental nature of PYUSD, suggesting it operates as a centralized digital asset under the auspices of one of the planet’s largest regulated payment enterprises.
In practical terms, this implies the potential for PYUSD tokens to be subject to freezing and confiscation.
Despite the criticisms, there are those who are of the opinion that PayPal venturing into stablecoins depicts a net positive for the industry as it increases user adoption. Echoing a similar statement, Mark Lurie, CEO of Shipyard Software
“USDC has a dominant market share within crypto, but crypto is dwarfed by the opportunity for real-world payments and cross-border transactions, where Paypal is a serious player. If it proves the use-case for stablecoins, not only will their utility become undeniably clear but other traditional financial institutions will face a competitive imperative to adopt stablecoins as well. If Paypal is serious about using stablecoins, it could be a major catalyst for stablecoin adoption.”