• by Colin Kirkland , August 7, 2023

In an attempt to help people utilize their money in web3 and digitally native environments, electronic currency platform PayPal is rolling out PayPal USD (PYUSD), a stablecoin tied directly to the U.S. dollar that is built on the Ethereum blockchain and is compatible with most widely used crypto wallets, exchanges and web3 apps.

Stablecoins are a specific form of cryptocurrency that’s value is often linked to a fiat currency, like the U.S. dollar. They are designed to maintain a stable price over time and are widely used in the crypto ecosystem.

“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 PayPal president and CEO Dan Schulman, who believes PayPal can provide a foundation “to contribute to the growth of digital payments.”

Over the coming weeks, eligible PayPal customers based in the U.S. who purchased PYUSD will be able to transfer the stablecoin between their PayPal account and compatible external wallets, send person-to-person payments using the stablecoin, fund purchases with PYUSD by selecting it at checkout, and convert any of PayPal's supported cryptocurrencies to and from PYUSD.

PayPal USD is backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents, the company says. PYUSD is also redeemable 1:1 for U.S. dollars and is issued by the regulated blockchain infrastructure, Paxos Trust Company.

This isn’t PayPal’s first foray into cryptocurrencies. In 2020, the company began letting users in the U.S. buy, hold and sell crypto. In 2021, PayPal customers were able to pay with crypto at millions of online businesses, and in 2022, the company invited users to transfer their crypto to other wallets and crypto exchanges.

Building off of its previous crypto efforts, PayPal says that its new stablecoin 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 mark a continued expansion into digital assets.

Starting in September of next year, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines “the instruments composing the reserves,” as well as a public third-party attestation of the value of PYUSD’s reserve assets.