PayPal (PYPL) said on Monday that it is entering the cryptocurrency market with its own US dollar-pegged stablecoin, PayPal USD (PYUSD). The Ethereum-based token will be available to PayPal users in the United States soon, marking the first time that a major financial company has issued its own stablecoin. Users can send and receive PYUSD between PayPal and compatible external wallets, fund purchases of products and services, and convert any of PayPal’s supported cryptocurrencies to and from PYUSD.
PayPal stated that the stablecoin will be accessible to a “already large and growing community of external developers, wallets, and web3 applications,” and that it will be easily adopted by cryptocurrency exchanges. Paxos Trust, situated in New York, issues PYUSD, which is fully backed by US dollar deposits, short-term Treasuries, and comparable cash equivalents. It is always redeemable for dollars and can be exchanged for other cryptocurrencies on PayPal’s network, including bitcoin (BTC), bitcoin cash (BCH), ether (ETH), and litecoin (LTC).
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” said Dan Schulman, president and CEO of PayPal, in a press statement. “Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
PYUSD will first be offered on Venmo, PayPal’s popular payment app. Meanwhile, PayPal stated that it would offer certified reports of the cash backing the stablecoin in order to alleviate concerns about unbacked tokens.
“Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves,” the firm said in a release. “Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets.”
“The attestation will be issued by an independent third-party accounting firm and conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA),” it added.