Legislation

PayPal First Major Fintech to Launch Dollar-Backed Stablecoin

AUG 7 2023·Updated AUG 27

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Image credit: Wikimedia Commons

The Facts

PayPal has launched its first stablecoin cryptocurrency, called PayPal USD (PYUSD), which will be backed by the value of the US dollar to "reduce friction" for virtual payments and provide faster, cheaper money transfers across borders.
CNN
PYUSD will be applicable for person-to-person payments, to fund purchases at checkouts, and to transfer funds between PayPal and other outside wallets. Currencies supported by PayPal will also be convertible to and from PYUSD.
Verge
The coin is issued by PayPal's brokerage partner, Paxos, which previously issued the dollar-backed, Binance-branded stablecoin BUSD. However, the New York State Department of Financial Services in February ordered it to stop issuing BUSD.
CNBC
PYUSD, which launched Monday, will become available "in the coming weeks" for US customers with PayPal Balance accounts, and on the PayPal-owned Venmo app "soon."
Verge
Though stablecoins are designed to hold a steady value by being tied to a fiat currency — PYUSD should always be equal to $1 — some have not. For example, stablecoin TerraUSD saw $40B wiped away after the crypto backing it — Luna — collapsed.
CNN
Following the news of PYUSD, shares of PayPal were up 2%. The company said its coin won't be linked to a complicated algorithm like Terra was, but rather Paxos Trust's blockchain infrastructure.
CNN

Sources Split

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RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

Though past stablecoins have certainly not being entirely successful, PayPal, which has a history in the crypto world, will help bring legitimacy to the emerging financial industry as the company will be cautious amid regulatory suspicion, as well as back the coin with the reliable dollar. Consumers can now have faith in the privacy and stability of banking with crypto.

TechStory

Narrative B

While PayPal may bring some nominal legitimacy to this young industry, we can't forget the fact that Facebook has already tried and abandoned its own stablecoin, and PayPal itself has previously paused its launch due to regulatory pushback. No one can put all their eggs in the stablecoin basket until the both the private and public sectors can provide evidence of its safety.