PayPal is launching a stablecoin for payments and transfers, the company announced on Monday. PayPal USD (PYUSD) is issued by Paxos Trust Company and is backed by U.S. dollar deposits, which are short-term U.S. customers gradually.
Eligible U.S. PayPal customers who purchase PYUSD will be able to transfer PYUSD between PayPal and compatible external wallets, send person-to-person payments using PYUSD, fund purchases with PYUSD by selecting it at checkout and convert any of PayPal’s supported cryptocurrencies to and from PYUSD.
“PayPal USD 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 foster the continued expansion into digital assets by the largest brands in the world,”Paypal in a press release. “Most of the current volume of stablecoins is used in web-specific environments- PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo.”
A stablecoin is a type of cryptocurrency whose value is tied to an external asset such as the U.S. dollar. There is some controversy around stablecoins. Last year, Meta ended us abandoning its plan of having its own stablecoin, called Diem, after regulatory backlash. PayPal itself paused working on its stablecoin earlier this year amid regulatory scrutiny of crypto.
“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 CEO and president Dan Schulman in a press release. “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.”