Close to three years following the move by PayPal to enable support for cryptocurrency across all American accounts, the financial technology firm has unveiled its proprietary stablecoin, linked directly to the value of the US dollar. Named PayPal USD, the company asserts that this currency is “fully underpinned by deposits in US dollars, as well as short-term US Treasury bonds and akin cash instruments.” PayPal’s initial exploration of creating a stablecoin was made public in January of the preceding year, a revelation that came after a developer stumbled upon code and imagery related to a “PayPal Coin” in the company’s application. At that time, the company committed to cooperating with the appropriate regulatory authorities “if and when the decision is made to proceed.”
During the announcement of PayPal USD, the company elucidated that the coin is a digital token minted on the Ethereum blockchain by Paxos Trust Company, which operates under the regulatory scrutiny of the New York State Department of Financial Services. Additionally, PayPal secured a BitLicense, a specific license for virtual currency activities, from the NYDFS in June 2022.
PayPal USD coins are available for purchase and sale at a rate of $1 per coin. Users have the ability to transmit the coins to other users for payment or employ them to buy products and services by selecting the option at checkout. Furthermore, the stablecoin can be transferred to compatible external digital wallets or be exchanged with other cryptocurrencies within a user’s account.
It’s worth noting that past attempts by large corporations to create their own stablecoins have been stymied by regulators. Meta, for example, labored for two years to launch a stablecoin, but the initiative fell apart after continuous setbacks stemming from regulatory apprehensions over potential misuse, such as money laundering. Ian Katz, the managing director of Capital Alpha Partners, shared with Reuters that the newly launched PayPal USD might soon catch the eye of governmental bodies like the Federal Reserve and the Securities and Exchange Commission. In the interim, PayPal’s main priority is to concentrate on introducing the novel currency and expanding its various applications throughout the United States.
Frequently Asked Questions (FAQs) about fokus keyword PayPal USD
What is PayPal USD?
PayPal USD is a stablecoin introduced by PayPal, pegged to the US dollar. It is fully backed by deposits in US dollars, short-term US Treasury bonds, and similar cash equivalents.
Who is responsible for issuing PayPal USD?
The PayPal USD coin is a digital token minted on the Ethereum blockchain by Paxos Trust Company, which is regulated by the New York State Department of Financial Services.
How can PayPal USD be used?
Users can buy, sell, and send PayPal USD coins for $1 each. They can also use them to purchase goods and services or transfer them to compatible external wallets. Additionally, they can convert other cryptocurrencies in their account to and from PayPal USD.
Did PayPal obtain any specific licenses for PayPal USD?
Yes, PayPal obtained a BitLicense, a specific license for virtual currency activities, from the New York State Department of Financial Services in June 2022.
What happened to other companies’ attempts to launch stablecoins?
Authorities have previously thwarted attempts by other major companies to launch stablecoins, like Meta, whose project collapsed due to regulatory concerns over potential misuse, such as money laundering.
Could PayPal USD attract regulatory attention?
Yes, Ian Katz, managing director of Capital Alpha Partners, told Reuters that PayPal USD could soon attract the attention of governmental bodies like the Federal Reserve and the Securities and Exchange Commission.