Digital Transactions Authoritative, insightful and timely information for payments professionals
Add a stablecoin to the roster of PayPal Holdings Inc.’s financial and payments products. Announced Monday, the PayPal USD will begin rolling out to PayPal accountholders today and in coming weeks.
A stablecoin is a form of cryptocurrency pegged to a reserve asset viewed as stable, such as gold or the U.S. dollar. The PayPal USD is tied, at a one-to-one ratio, to the U.S. dollar and is issued by Paxos Trust Co. PayPal says its stablecoin is backed by U.S. dollar deposits, short-term U.S. securities, and similar cash equivalents.
PayPal USD, which also will be available in Venmo eventually, will have four functions. These include transferring between PayPal and compatible external wallets; sending person-to-person payments using the stablecoin; funding purchases at the checkout; and converting any of PayPal’s supported cryptocurrencies to and from PayPal USD. Checkout transactions made with PayPal USD are settled in fiat currencies.
PayPal USD can be bought or sold through PayPal at $1 per PayPal USD.
“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” says Dan Schulman, PayPal president and chief executive, in a statement. PayPal says PayPal USD is meant to be available to consumers, merchants, and developers to connect fiat and digital currencies.
PayPal said it received a BitLicense from the New York Department of Financial Services in 2022. Beginning in September, New York City-based Paxos will issue a public monthly Reserve Report for PayPal USD and publish a third-party attestation of the value of PayPal USD reserve assets.
