PayPal launches a stablecoin straight into crypto’s muddied regulatory waters
Venmo’ing Satoshi… PayPal is doubling down on crypto. On Monday, the Venmo owner said it was launching a stablecoin that’ll be available to US customers through PayPal. The payments biz said it hoped to build a link between digital currencies and OG payments used by merchants and shoppers. Picture: folks sending PayPal USD (PYUSD) between PayPal and (eventually) Venmo wallets just like cash.
Washingtons: PayPal said PYUSD will be pegged to the US dollar (think: 1 PYUSD = $1) and fully backed by USD deposits and cash equivalents like short-term Treasuries.
WhoSD: While it’s PayPal’s token, PYUSD is issued by New York’s Paxos Trust and lives on the ethereum blockchain.
Hoping for stability… With the launch of PYUSD, PayPal’s diving headfirst into an industry in flux. Earlier this year, New York regulators ordered Paxos to stop issuing the Binance-affiliated BUSD stablecoin — reportedly over customer due-diligence concerns — sparking a selloff of the coin. Now Tether’s USDT and Circle’s USDC command a combined 87% of the stablecoin market. Meanwhile, industry heavyweights are looking abroad as they point fingers at a crackdown by US regulators like the SEC.
Exod-US: Earlier this year, Coinbase and Gemini moved to expand overseas while Bittrex sought to exit the US altogether. Last week the $33B fintech startup Revolut said it would end crypto offerings to American customers.
Swimming against the current can give you a boost… when the tide turns. PayPal’s decision to forge ahead while crypto regulation remains up in the air could help it secure a piece of the $126B stablecoin market as other players exit. Despite the choppy waters, a PayPal exec said regulatory clarity might be on the horizon. Still, last month the White House was said to have derailed a potential bipartisan stablecoin bill.