Key Takeaways:
- PayPal USD (PYUSD) is a US dollar–pegged stablecoin from PayPal, designed for digital payments and Web3 environments.
- It aims to connect fiat and digital currencies, potentially transforming global payments through PayPal’s extensive merchant network.
- PYUSD is fully backed by US dollar (USD) deposits like short-term US Treasury bonds and similar cash equivalents, and can be redeemed 1-to-1 for USD on PayPal.
What Is PYUSD?
A type of cryptocurrency designed to have a stable value, stablecoins are unlike other assets and cryptocurrencies, such as Bitcoin and Ethereum, which are known for their price volatility. The value of a stablecoin is typically pegged to a fiat currency like the US dollar (USD).
Stablecoins aim to provide a measure of stability and reliability to traders in the crypto market, offering a way to mitigate the risks associated with the price fluctuations of other cryptocurrencies. This makes them a popular choice for those who want to trade or hold digital assets without being exposed to constant severe volatility.
For more on stablecoins, read What Are Stablecoins and How Do They Work?
Designed for digital payments and Web3 environments, PayPal USD (PYUSD) is a US dollar–pegged stablecoin launched by the global payment services provider PayPal. As a stablecoin, it is designed to have a steady value over time, relative to the US dollar. However, unlike other stablecoins, such as USDT and USDC, PYUSD is subject to regulatory oversight by the New York Department of Financial Services (NYDFS).
Issued by Paxos Trust Company, PayPal USD is a potential step forward for bridging decentralised finance (DeFi) and traditional finance (TradFi). As a unique hybrid, it offers the decentralised benefits of digital currencies with the stability of traditional fiat currency. In user terms, PYUSD aims to provide inclusive, broad access to the financial system, enabling fast and efficient money movement. It is available to consumers, merchants, and developers hoping to seamlessly connect fiat and digital currencies.
PayPal USD Tokenomics
PYUSD was launched by PayPal, but as an ERC-20 token, it is issued on the Ethereum blockchain. As the only stablecoin supported within the PayPal network, PYUSD leverages PayPal’s decades-long experience in payments at scale. Working as a bridge between traditional, real-world payments and the crypto space, it combines its TradFi-established payment network with the speed, cost, and programmability of blockchain protocols.
Paxos has officially announced the contract address of PYUSD, which, per Crypto.com Price, has a total supply of 43.3 million (at the time of writing). Unlike many other stablecoins, PYUSD is backed by USD deposits and other cash equivalents, which offer more stability and reliable off-ramps than other common backing methods for stablecoins like commercial paper or commodities.
Paxos also began publishing a monthly PYUSD Reserve Report in September 2023, and facilitates third-party audits of reserves conducted in accordance with American Institute of Certified Public Accountants (AICPA) standards.
What Can PYUSD Be Used For?
Currently, eligible US PayPal users can:
- Transfer PYUSD between PayPal and compatible external wallets.
- Send person-to-person payments using PYUSD.
- Fund purchases with PYUSD by selecting it at checkout.
- Convert any of PayPal’s supported cryptocurrencies to and from PYUSD.
PayPal has seamlessly integrated PYUSD within its network and has partnered with Venmo, where US PayPal customers can use their Venmo accounts to make purchases during a mobile PayPal checkout. Note that merchants’ fees and protections remain consistent with their PayPal payments.
Additionally, all cryptocurrencies that PayPal supports to date can be converted to and from PYUSD, allowing users to move liquidity from their crypto portfolio to stablecoins without leaving the app.
In other words, PYUSD could become a facilitator of global payments, leveraging PayPal’s existing network of 29 million merchants. It is also programmable, so it offers developers a functional cryptocurrency that can be built into public blockchains, which can potentially help link the traditional economy and Web3.
How to Buy PYUSD
PYUSD is listed in the Crypto.com App with the growing list of 250-plus supported cryptocurrencies and stablecoins, including Bitcoin (BTC), Ethereum (ETH), Polkadot (DOT), USD Coin (USDC), and Cronos (CRO). Crypto.com App users can now buy PYUSD with USD, EUR, GBP, and 20-plus other fiat currencies and spend it at over 80 million merchants globally using the Crypto.com Visa Card.
Alternatively, users can also buy PYUSD on the Crypto.com Exchange. To start trading PYUSD today, download the Crypto.com App.
Conclusion
Stablecoins provide a measure of stability and reliability to traders in the cryptocurrency market, offering a way to mitigate the risks associated with the price fluctuations of other cryptocurrencies. They are a popular choice for those who want to trade or hold digital assets without being exposed to constant severe volatility.
Designed for digital payments and Web3 environments, PayPal’s PYUSD, a US dollar–pegged stablecoin, goes beyond launching another cryptocurrency into the market. As a stablecoin, it is designed to have a steady value over time, relative to the US dollar, and is a significant step towards the future of digital currencies. However, unlike other stablecoins, PYUSD is subject to regulatory oversight.
But by adhering to regulatory standards and utilising its existing TradFi infrastructure, PayPal is positioned to formally introduce crypto into the global payment ecosystem.
Due Diligence and Do Your Own Research
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Although the term ‘stablecoin’ is commonly used, there is no guarantee that the asset
will maintain a stable value in relation to the value of the reference asset when traded on
secondary markets or that the reserve of assets, if there is one, will be adequate to satisfy
all redemptions.
Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.
