PayPal’s launch of its stablecoin tied to the US dollar, issued on Ethereum is being called a watershed moment for in the crypto industry. The move comes after more than a year of rumours and speculation since PayPal first acknowledged the growth of the dollar-backed stablecoin program. The Ethereum-based stablecoin aims to provide consumers with a reliable and secure method of digital payment.
Read more: Distributed ledger technology: Are banks ready for this chain reaction?
Nasdaq listed Paypal has become the first major player to launch its stable coin which eligible US PayPal customers who purchase PayPal USD can now use for retail purchases, P2P transfer, and wallet-to-wallet transfer.
The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar
Dan Schulman, president and CEO, PayPal
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar,” said Dan Schulman, president and CEO, PayPal in a statement.
Already a study found that the value of payment transactions powered by stablecoins will exceed US$187 billion globally by 2028, up from US$53 billion in 2023. The study found that stablecoins are making rapid progress in the cross-border market in particular, with them representing a key way to bypass slow, expensive and difficult-to-track existing cross?border payment rails.
The fact that stablecoins have their value pegged to a fiat currency or commodity, removing the volatility inherent to a typical cryptocurrency, makes it quite attractive to investors.
Shivam Thakral, CEO of BuyUcoin, India’s second-longest-running digital asset exchange, calls it a huge advancement in the world of cryptocurrencies.
We can expect more fintech giants to make foray into the digital asset market by leveraging the combined strength of digital and traditional finance
Shivam Thakral, CEO of BuyUcoin
“PayPal’s entry into the stablecoin market highlights the growing acceptance and usage of cryptocurrencies within conventional financial institutions and may pave the way for additional market innovation. We can expect more fintech giants to make foray into the digital asset market by leveraging the combined strength of digital and traditional finance,” he predicts.
Denis Sklyarov, Co-founder and CEO of WiFi Map, a crypto centric DeWi app, says the launch of stablecoin by PayPal is aimed at bridging the gap between Web3 and fiat for users, merchants, and developers.
The move signals a paradigm shift in the mindset of big companies toward cryptocurrencies and creates an environment of trust and transparency by leveraging the combined strength of Fintech and crypto
Denis Sklyarov, Co-founder and CEO of WiFi Map
“Since PayPal USD is 100% backed by US dollar deposits, it will automatically generate trust among the users and merchants which will enable rapid mass adoption of PYUSD,” he says.
He also adds that the launch of PYUSD will revolutionize the global payment system and will leverage the emerging potential of stablecoins to address the loopholes in the global financial system, “The compliant stablecoin will change the way people send money to their friends and families, send remittances, and make international payments a hassle-free experience. The move signals a paradigm shift in the mindset of big companies toward cryptocurrencies and creates an environment of trust and transparency by leveraging the combined strength of Fintech and crypto.”
Read more: MSMEs revel in high retail sales with digital payments
While the move will make the financial system more liberal and less dependent on centralized banks, Sklyarov also notes that maintaining customer trust will require PayPal to publish regular proof of reserve reports and provide impeccable security for user funds.
“It will be interesting to see if PYUSD will be compatible with self-custody wallets if users want complete control of their keys and coins. The compatibility with a wider range of wallets and custody platforms will enable faster adoption of PYUSD,” he says.
