Global payments company PayPal launched its US dollar-pegged stablecoin, PayPal USD (PYUSD), on Monday as part of its expansion into the cryptocurrency market.
The Ethereum-based token is available to PayPal users in the US, and is backed by dollar deposits, US treasuries and cash equivalents, the company said.
“The launch of the stablecoin has started today and it will be rolled out in the coming weeks. Eligible US PayPal customers who purchase PayPal USD will be able to transfer PayPal USD between PayPal and compatible external wallets. It also allows the user to send person-to-person payments using PYUSD,” it said.
Users can buy and sell 1 PYUSD for 1 US dollar on PayPal, and there is no fee to buy, sell, hold or transfer PYUSD to eligible US PayPal balance accounts. There is, however, a fee to convert between PYUSD and other cryptocurrencies, the company said, without disclosing the fee.
“The shift towards digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar,” said Dan Schulman, president and chief executive of PayPal.
The shares of PayPal were trading up 1.5 per cent at at $63.75 on Nasdaq at 7.52pm UAE time on Monday.
The stablecoin is issued by Paxos Trust Company, a company regulated by NYSDF, PayPal said.
PayPal was issued a BitLicence by in June last year by the New York State Department of Financial Services (NYSDF) after previously obtaining a conditional BitLicence.
“We are exploring a stablecoin; if and when we seek to move forward, we will, of course, work closely with relevant regulators,” Jose Fernandez da Ponte, senior vice president of crypto and digital currencies at PayPal, said at the time.
Stablecoins are a type of cryptocurrency designed to have a steady value over time relative to a reference asset, such as the dollar.
Stablecoins are programmable, offering developers a useful digital currency that can be built into public blockchains and can help link the traditional economy and Web3.
“Fully-backed, regulated stablecoins have the potential to transform payments in Web3 and digitally native environments,” PayPal said.
Last week, the California-based company announced a profit of $1.03 billion in the second quarter, compared to a loss of $341 million in the same period last year. Its revenue during the April-June period increased by 7 per cent on an annual basis to $7.3 billion.
In February, PayPal said it will lay off 2,000 employees, about 7 per cent of its workforce, as the technology industry continues to cut back on a hiring surge that began after the onset of the Covid-19 pandemic.
In June, PayPal and private equity firm KKR announced a multiyear relationship for European “buy now, pay later” receivables.