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PayPal is taking another step into the crypto industry, rolling out its very own stablecoin called PayPal USD.
Issued by Paxos Trust Co., the dollar-pegged stablecoin is expected to become "a part of the overall payments infrastructure," PayPal CEO Dan Schulman told Bloomberg.
PayPal USD (PYUSD) is backed by short-term treasuries, dollar deposits, and cash equivalents, per the firm's announcement. The token will be issued on the Ethereum network as an ERC-20 token.
PayPal did not immediately respond to Decrypt's request for comment.
A stablecoin is a cryptocurrency that tracks the price of a fiat currency, such as the dollar or the pound. Currently, the market leaders in this sector are Tether (USDT) and Circle (USDC).
PayPal's offering is expected to work in tandem with its other crypto offerings, reportedly allowing users to swap the dollar-denominated tokens for cash or other assets on its platform.
The stablecoin will be available to eligible U.S., enabling them to transfer PayPal USD between PayPal and compatible external wallets, send person-to-person payments using PYUSD, and convert any of PayPal's supported cryptocurrencies to and from PayPal USD at vendor checkout points.
In March 2021, PayPal finally launched a crypto checkout service for merchants, letting users pay with crypto.
It continued its crypto push in May that same year with third-party integrations that allowed users to buy Bitcoin on the platform and then send it off the platform.
Paxos to publish PayPal USD reserve reports
PayPal further stated that starting next month, Paxos will be publishing public monthly reserve reports for PayPal USD outlining the instruments composing the stablecoin’s reserves.
Additionally, Paxos will be engaged in publishing public third-party attestations of the value of PayPal USD reserve assets. This attestation will be released by an independent third-party accounting firm and conducted per attestation standards set by the American Institute of Certified Public Accountants (AICPA).
“With the launch of the first stablecoin by a leading financial institution, PayPal and Paxos are proving the real-world value of blockchain technology,” Paxos CEO and Co-Founder Charles Cascarilla said in a statement, calling PYUSD “the most significant leap forward for digital assets and the financial industry.”
Earlier this year, the New York-based firm announced the termination of its relationship with the world’s largest crypto exchange Binance which saw the company mint the BUSD stablecoin.
The move came after the U.S. Securities and Exchange Commission (SEC) planned to sue Paxos for violating investor protection laws, the company confirmed to Decrypt in February.