Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
PayPal Officially Launches U.S. Dollar Stablecoin for Web3 Ecosystem
News | Aug 8, 2023
Image: Unsplash/Muhammad Asyfaul
PayPal has officially launched its U.S. Dollar Stablecoin, named PayPal USD (PYUSD).
- This digital currency is fully backed by U.S. dollar deposits, short-term U.S. treasuries, and other similar cash equivalents. Users can redeem the stablecoin on a 1:1 ratio for U.S. dollars.
- The primary purpose of PayPal USD is to cater to digital payments and Web3. It has been designed to be compatible with widely used exchanges, wallets, and Web3 applications. The stablecoin is available from today and will be progressively rolled out in the U.S. (excluding Hawaii) in the upcoming weeks. More details can be found on PayPal's official page for PYUSD.
- PayPal USD aims to minimize friction for inexperienced payments in virtual settings. It will enable fast transfers to support friends and family, facilitate remittances, international payments, and direct flows to developers and creators.
See: OpEd: Draft U.S. Bill on Stablecoins Highlight Differences with CBDCs
- The stablecoin will also support the continued growth into digital assets by some of the world's most prominent brands. A significant portion of the current stablecoin volume is utilized in web3-specific environments. PayPal USD is designed to be compatible with this ecosystem from its inception and will soon be available on Venmo.
Bridging TradFi and Emerging Web3 Ecosystem
- This move by PayPal signifies a bridge between traditional fiat currencies and the emerging Web3 for consumers, merchants, and developers. The introduction of a stablecoin by such a major financial institution underscores the growing acceptance of digital currencies and their potential to reshape the financial landscape.
Dan Schulman, the president and CEO of PayPal:
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.
- Dan Schulman further emphasized PayPal's commitment to responsible innovation, compliance, and its history of introducing new experiences to its customers. Schulman believes that these factors form a solid foundation for the growth of digital payments through the newly introduced PayPal USD.
Market Approves
- Following the announcement, PayPal's shares saw an increase of over 2%. Stablecoins, such as the one introduced by PayPal, are frequently used for trading in and out of other crypto assets like bitcoin and ether. Their advantage lies in the fact that they don't enter the traditional financial system, allowing traders to move in and out of positions more swiftly and cost-effectively than with fiat currencies like the dollar.
Bank of Canada: Central Bank Digital Currencies Literature Review and New Questions
- This move by PayPal is indicative of the growing acceptance and integration of digital currencies in mainstream financial institutions. The introduction of a stablecoin by such a prominent player in the financial sector could pave the way for further innovations and broader adoption of digital currencies in the future.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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