PayPal Expands Its Services By Launching Its Very Own Stablecoin

paypal stablecoin


  • The global fintech company PayPal has launched a fully backed, USD-pegged stablecoin.
  • Paxos, the company that also released Binance USD, issues PYUSD on behalf of PayPal.

PayPal Expands its Crypto Services

PayPal, the California-based money transmitter, announced in an official press release its latest foray into crypto. The firm launched its very own stablecoin, PayPal USD (PYUSD).

According to PayPal, the stablecoin is fully backed using a combination of U.S. Dollars, short-term U.S. treasuries, and other cash equivalents. With full backing, the PYUSD can be redeemed for USD on a 1:1 basis.

People who purchase the PYUSD can use it for various purposes. Some initial options include sending money, making purchases, and converting to and from supported crypto. PayPal even allows transfers to external compatible wallets.

PayPal intends to reshape fintech, crypto, and the stablecoin industry with its PYUSD. With the rollout already started, it will be made available to not only consumers and merchants on the PayPal network, but developers too. This means PayPal will eventually allow the broader crypto market to adopt and use its stablecoin.

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.

– President and CEO, PayPal, Dan Schulman.

Paxos As Issuer of PYUSD

Paxos' PYUSD dedicated page. | Source: Paxos
Paxos’ PYUSD dedicated page. | Source: Paxos

While PYUSD carries the PayPal branding, it is issued by Paxos Trust Company. Paxos is a limited trust firm overseen by the New York State Department of Financial Services. As such, the PYUSD complies with the regulatory requirements, including transparency and the stablecoin being fully backed.

Paxos will issue a monthly reserve report for PYUSD, assuring the public and regulators that all issued or held PYUSD are fully backed. A third-party auditor will oversee the report to confirm the accuracy of the reserve reports.

Paxos was in the news recently due to the SEC probing its issuance of Binance USD stablecoin, the BUSD. Paxos was later ordered to stop issuance in February this year. It seems that Paxos has learned from its past and improved its compliance.

Fake PYUSD Flood the Crypto Market

Following the PayPal announcement, several fake PYUSD scams have popped up. Many Decentralized Exchanges (DEXs) already see trading pairs, such as PYUSD/ETH pair on Uniswap.

All such trading pairs and liquidity pools are scams as PayPal has not said it will make the stablecoin available on exchanges yet- centralized or decentralized.

Fake PYUSD/ETH trading pair on Uniswap | Source: Uniswap
Fake PYUSD/ETH trading pair on Uniswap | Source: Uniswap

This has led to bad actors taking advantage of the susceptible and the unsuspecting. The ERC-20 standard allows anyone to create tokens – including fake ones.

These tokens can then be listed on any DEX, scamming people into believing the real token is available and then walking away with their crypto as they deposit in the liquidity pool for the fake ones.

While the PYUSD is contained within the larger PayPal ecosystem, can it one day rival the big ones like USDT, TUSD, and USDC?

PayPal has the advantage of its long history in the money business and the expansive global user base – but can PYUSD rival the big ones like USDT, TUSD, and USDC is something to be watched closely.