PayPal’s US dollar dominated stablecoin will be issued by Paxos
- Paypal launched its own stablecoin – PYUSD, backed by the US dollar, treasury bills, and cash equivalents
- The coin will be issued by Paxos, the same company that issued BUSD, which was later labelled as security by the SEC
PayPal, an online payments giant, announced its step into the digital currency market with its own stablecoin – PayPal USD [PYUSD]. The coin will be pegged against the dollar and backed by dollar deposits, short-term US treasuries, and cash equivalents. Notably, the stablecoin will be issued by Paxos Trust Company, the same company that issued Binance stablecoin [BUSD]. The press release read,
“PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets by the largest brands in the world.”
Additionally, the stablecoin will be an ERC-20 token, leveraging the security provided by the Ethereum blockchain. And, it will be initially available for eligible US customers and can be used between PayPal and other compatible wallets. The company also stated that the stablecoin will be available on Venmo, another American payments service company.
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Moreover, the company will publish its Reserve Report for PYUSD, detailing the reserves, starting September 2023. The report will also include a third-party attestation of the value of the reserves. This will be issued by a company that meets the American Institute of Certified Public Accounts (AICPA) standards.
Paypal’s PYUSD had ties with bankrupt FTX
Notably, the news of PayPal’s stablecoin interest has been circulating in the news since last year. More so, the coin was meant to be unveiled in 2022 but had met with several hurdles including regulatory roadblocks. According to the latest development, the company had initially set out to partner with FTX – now collapsed crypto exchange.
In addition, it was also meant to be launched on the Solana blockchain, according to Wu Blockchain. However, this plan went downhill after FTX went bankrupt in November 2022.
Moreover, PayPal’s partner for PYUSD – Paxos was in the limelight couple of months ago for issuing BUSD – a Binance stablecoin. The coin was labelled as a security by the US Securities and Exchanges Commission [SEC]. This resulted in Paxos halting the issuance of the coin and subsequently leading to its suspension on exchanges.
Since its halt announcement, the company saw over $7 billion BUSD being withdrawn within 30 days. The company had also stated that it would stand against the regulator to protect the status of BUSD.