PayPal introduces its own stablecoin that's pegged to the US dollar
Almost three years after PayPal started supporting cryptocurrency for all US accounts, the fintech company has launched its own stablecoin that's pegged to the US dollar. PayPal USD, the payment processor said, is "100 percent backed by US dollar deposits, short-term US Treasuries and similar cash equivalents." The company first confirmed that it was "exploring a stablecoin" back in January last year after a developer found code and images for a "PayPal Coin" in its app. It said back then that it will work with relevant regulators "if and when [it] seek[s] to move forward."
In its announcement, PayPal explained that its coin is a token issued on the Ethereum blockchain by the Paxos Trust Company, which is subject to the regulatory oversight of the New York State Department of Financial Services. The company also obtained a BitLicense, or a business license of virtual currency activities, from the NYDFS in June 2022.
Users can buy and sell PayPal USD coins for $1 each. They can send the coins to other users as payment or use them to purchase goods and services by selecting the option during the checkout process. They can also transfer PayPal USD to compatible external wallets or convert other cryptocurrencies in their account to and from the stablecoin.
As Reuters notes, authorities previously thwarted attempts by major companies to introduce stablecoins of their own. Meta, for instance, spent two years trying to launch a stablecoin, but the project collapsed after repeated delays due to regulators' concerns that it could be used for money laundering and other nefarious purposes. Ian Katz, managing director of Capital Alpha Partners, told Reuters that PayPal USD could soon attract the attention of the Federal Reserve and the Securities and Exchange Commission. For now, PayPal is focusing on rolling out the new currency and all the things people can do with it in the US.
This article originally appeared on Engadget at https://www.engadget.com/paypal-introduces-its-own-stablecoin-thats-pegged-to-the-us-dollar-091019012.html?src=rss