Online payments giant PayPal has announced the launch of a US dollar-denominated stablecoin, PayPal USD (PYUSD), signaling its entry into the cryptocurrency landscape.
According to the company's statement, the move is aimed at capitalizing on the growing potential of stablecoins to revolutionize web3 and digital payment environments.
PayPal USD, issued by Paxos Trust Company, is pegged 1:1 to the U.S. dollar and is fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents.
This new stablecoin will be an ERC-20 token issued on the Ethereum blockchain, positioning it within an existing, expansive network of developers, wallets, and web3 applications.
Starting this week, PayPal will gradually roll out PayPal USD to eligible U.S. customers.
This new offering aligns with the shifting digital currency landscape, according to Dan Schulman, President and CEO of PayPal.
"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," he said.
Commenting on the launch, Schulman went on to highlight PayPal's commitment to responsible innovation, compliance, and a history of delivering novel experiences to customers as the driving force behind the development of PayPal USD.
This stablecoin will be compatible with web3-specific environments, widely used by the existing volume of stablecoins.
At the same time, PayPal USD will become available on the popular payment app Venmo soon.
PayPal had been issued a BitLicense by the New York State Department of Financial Services (NYDFS) in June last year, after receiving a conditional license in the fall of 2020.
As a licensed entity, Paxos Trust Company, the issuer of PayPal USD, is subject to NYDFS regulatory oversight, providing an additional layer of security and trust for users.