PayPal’s introduction of its native stablecoin, PayPal USD (PYUSD), has sparked heated debates within the crypto industry regarding its possible sway on payments and wider crypto adoption.
While this step seems to be a big jump toward accepting cryptocurrencies in regular finance, some industry observers advise caution. They underline the hurdles and limitations that could slow down broader adoption.
What is PYUSD?
This initiative aims to bridge the fiat and digital currency realms for consumers, merchants and developers. PayPal CEO Dan Schulman highlighted the need for a stable digital-fiat conduit. PYUSD facilitates various transactions, including payments, fund transfers between PayPal and compatible external wallets, and crypto conversions:
“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. Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
The coin is designed to mitigate payment frictions in virtual environments, expedite value transfer, and simplify digital asset engagement by being a safer alternative to the fluctuating nature of most cryptocurrencies.
PYUSD, being an ERC-20 token on the Ethereum blockchain, is geared for compatibility with prevalent exchanges, wallets and Web3 applications, with plans to extend its availability to Venmo.
While the coin is a step toward reducing the gap between conventional and digital financial ecosystems, the widespread adoption of PYUSD across PayPal’s vast user base in 200 markets remains to be seen.
Regulatory oversight for PYUSD is provided by the New York State Department of Financial Services, with Paxos set to publish a monthly reserve report and a third-party attestation of the reserve assets’ value from September 2023, promoting transparency.
Besides PYUSD, PayPal continues to focus on enhancing digital currency education and comprehension among consumers and merchants, supplementing its existing services that allow customers to transact in select cryptocurrencies.
Effect on the industry
“The launch of PYUSD really signifies the largest payments company to date embracing blockchain technology in a way that creates a new standard and a new level of utility in the product itself,” Walter Hessert notes on the American…
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