PayPal launches 'PYUSD' stablecoin

Payments giant PayPal has launched a stablecoin dubbed PYUSD to accelerate its push into digital and web3 payments.

PayPal's users will now be able to transfer funds into PYUSD and then send them on to external wallets and major exchanges as well as send them directly to other users or pay for goods. 

"PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets by the largest brands in the world," the company said in a statement.

PYUSD will also act as a type of ‘bridge’ between other cryptocurrencies, with PayPal able to charge fees to users.

"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, president and CEO, PayPal said.

"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," he added. 

The listed fintech giant, which has a market capitalisation of $72bn, has launched the new product in the US only at present.

Stablecoins will, according to many crypto enthusiasts, solve one of the seemingly innate problems with cryptocurrencies: volatility.

The adoption of crypto payments, the argument goes, suffers from this volatility as relative values move around so much. Stablecoins aim to provide a more predictable and consistent value, solving this issue.

While stablecoins aim for stability, they have not always been so with some high-profile examples such as Terra failing to maintain 'their peg' and resulting in investors losing their money.

PYUSD is built on top of the Ethereum blockchain and is backed by U.S. dollar deposits, as well as short-term US Treasuries and “similar cash equivalents”, according to a media release from PayPal.

The launch is made possible through PayPal’s long-term crypto partner Paxos Trust company, a New York-based firm that issued one of the first stablecoins and also counted Revolut as its first customer.