PayPal USD (PYUSD) is a stablecoin offered by PayPal, the leading global digital payments service provider. It is designed to maintain a stable value by being pegged to the US dollar (USD).
PYUSD is fully backed by US dollar deposits, short-term US treasuries, and similar cash equivalents. This backing ensures that 1 PYUSD is always equal in value to 1 US dollar, making it a stable digital asset.
PayPal USD is issued and managed by Paxos Trust Company, a regulated financial institution. This ensures regulatory compliance and transparency.
PYUSD can be used for various digital transactions and payments, similar to other cryptocurrencies. Users can hold PYUSD in their digital wallets and use it for online purchases, transfers, and investments.
PayPal has designed the PYUSD coin to provide stability in the volatile world of cryptocurrencies. It offers a convenient way for users looking to make fast, cheap, and secure digital payments or leverage its price stability to use it as a store of value in terms of high volatility in the crypto market.
PayPal aims to use PYUSD to facilitate global payments through its extensive merchant network. This could streamline cross-border transactions and increase the adoption of digital currencies for everyday payments. Here’s how the PYUSD coin works:
The PYUSD crypto is designed to maintain a stable value by being pegged 1:1 to the US dollar. This means that 1 PYUSD is always worth 1 US dollar. To ensure this stability, PayPal holds reserves in US dollar deposits, short-term US treasuries, and similar cash equivalents, which back the PayPal USD price.
The value of PYUSD is kept in sync with the US dollar in real time. This means that the price of 1 PYUSD is regularly verified and maintained at $1, ensuring its stability.
Paxos Trust Company, a regulated financial institution, issues PYUSD. When users acquire PYUSD, they exchange their funds for an equivalent amount of this stablecoin.
Users can hold PYUSD in their digital wallets, including PayPal wallets or compatible external crypto wallets. PYUSD can be used for various digital transactions, such as online purchases, transferring funds, and conducting investments.
PayPal officially launched the PYUSD stablecoin on 7 August 2023. While this is the payments giant’s first official cryptocurrency offering, PayPal has been an active participant in the crypto market since 2020, when it first started allowing its US users to buy, hold, and sell cryptocurrencies within its platform. In just over a month since its launch, PayPal USD’s market cap has crossed $44 million, making it among the top 20 stablecoins by market capitalization.
Its announcement of the PayPal USD stablecoin is a significant expansion of PayPal’s foray into the cryptocurrency world. Paxos, the issuer of PYUSD, plans to release detailed monthly reports on the assets backing PYUSD starting September 2023. Such reports will enhance transparency and give users insights into the stablecoin's reserves, building trust and encouraging higher adoption.
Shortly after announcing its launch, PayPal integrated PYUSD into its broader ecosystem, allowing eligible US customers to purchase, hold, and transfer PYUSD.
KuCoin listed PYUSD on our platform in September 2023, giving our global user base access to PayPal’s cryptocurrency. KuCoin users can buy, sell, and trade PYUSD/USDT freely and earn arbitrage profits from the price discrepancy between these two stablecoins.
Investing in PayPal’s stablecoin can be a good option for several reasons:
PYUSD is a stablecoin whose value is pegged 1:1 to the US dollar. This stability can make it an appealing choice for investors looking to avoid the price volatility often associated with cryptocurrencies.
PYUSD is fully backed by US dollar deposits, short-term US treasuries, and similar cash equivalents. This backing provides confidence that each PYUSD is backed by tangible assets.
Starting in September 2023, Paxos, the issuer of PYUSD, committed to releasing detailed monthly reports on the assets backing PYUSD. This transparency can build trust among investors.
PYUSD is integrated into the PayPal ecosystem, allowing eligible US customers to purchase, hold, and transfer it. This integration can increase its utility for online payments.
Some investors may consider PYUSD for its potential to earn interest. PayPal's strategy includes earning interest on the deposits backing PYUSD, potentially offering a yield to investors.
For crypto investors, adding a stablecoin like PYUSD to their portfolio can serve as a risk management strategy, allowing for quick conversion to a stable asset during market turbulence.
PYUSD, PayPal's stablecoin, serves several important use cases within the digital payment ecosystem:
PYUSD can be used for online purchases and transactions wherever PayPal is accepted. This includes payments for goods and services from various online merchants, making it a convenient digital currency for e-commerce.
PYUSD can facilitate cross-border payments and remittances. Its stable value makes it a reliable choice for sending money internationally while avoiding exchange rate fluctuations.
Cryptocurrency traders and investors can trade PayPal USD against more volatile cryptocurrencies and use it as a stable intermediary when transitioning to fiat currencies. It provides a stable store of value during trading.
If you want to store your digital assets in a stable form, PYUSD offers a secure and stable option. It helps protect against the price volatility often associated with other cryptocurrencies.
While not the primary use, PYUSD may offer the potential to earn interest in the future. PayPal has expressed its strategy to earn interest on the assets backing PYUSD, which could provide an additional incentive for holding it.
PYUSD is integrated into PayPal's digital wallet, making it easy for PayPal users to buy, sell, hold, and transfer this stablecoin within the PayPal app or website.
Cryptocurrency investors can use PYUSD as a risk mitigation tool during periods of high market volatility. Converting assets into a stablecoin can help preserve value during uncertain times.
PayPal has a strategic approach to generating revenue through its stablecoin, PYUSD. Here are some ways PayPal could generate revenue through its stablecoin:
One of the primary ways PayPal aims to make money from PYUSD is by earning interest on the assets backing the stablecoin. PYUSD is fully backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents.
By investing these assets, PayPal can earn interest over time, contributing to its revenue. This approach aligns with PayPal's goal of making PYUSD an extension of the PayPal balance, allowing users to earn interest on their holdings. PayPal's approach to earning interest on PYUSD assets differentiates it from other major stablecoins. Its potential to earn interest sets it apart and makes it more attractive to investors.
PayPal may charge transaction fees as a payment processor when users make payments or transfers using PYUSD. While this fee might be nominal, the cumulative effect of a large user base exceeding 400 million can generate significant revenue for the company.
PYUSD is integrated into the PayPal ecosystem, allowing users to use it within the PayPal app or website seamlessly. This integration enhances user engagement with PayPal's services, potentially leading to increased usage of other PayPal financial products and services, such as lending and investments, which can contribute to revenue growth.
Offering a stablecoin like PYUSD can enhance user loyalty by providing a stable and convenient digital currency option within PayPal's ecosystem. Satisfied users may continue using PayPal’s other services, contributing to the company's revenue.
PayPal USD (PYUSD) and Tether (USDT) are both stablecoins, but there are several significant differences between the two:
PYUSD is issued by PayPal and is backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents. It is fully collateralized, aiming for stability.
USDT, on the other hand, is issued by Tether Limited. While USDT is also intended to be backed 1:1 by the US dollar, there have been historical concerns and controversies regarding its full backing and transparency.
PYUSD is centralized, with PayPal as its issuer, and is issued only on the Ethereum network as of September 2023. This means PayPal has control over its issuance and operations.
USDT started as a centralized stablecoin but has expanded to operate on multiple blockchains, including Ethereum, Tron, and others. This has led to a mix of centralized and decentralized aspects.
PYUSD is primarily integrated into PayPal's ecosystem, offering convenience for PayPal users to hold and use it within their accounts. It can be used for payments and transfers. PYUSD is a relatively new stablecoin, and its market adoption may depend on the growth of the PayPal ecosystem and user base.
As the top stablecoin, USDT is widely used across various cryptocurrency exchanges and platforms for trading, liquidity provision, and a stable store of value. It has a broader ecosystem beyond a single platform.