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On August 7, online money transfer and e-commerce giant PayPal launched the PayPal USD (PYUSD) stablecoin.
As a result, PayPal became the first major US financial company to launch its own stablecoin backed by US dollars. The announcement comes more than a year after PayPal began allowing users to transfer, send and receive more major crypto assets.
So why is PayPal news important?
Essentially, a well-regulated convenience stablecoin has just been made available to millions of consumers to use in their daily lives, through one of the world’s most important payment intermediaries.
PayPal is a large federally registered money services company (MSB) and state regulated money transmitter. It issued a token backed by US dollars through Paxos, which is a trust company regulated by the New York State Department of Financial Services (NYDFS). To us, this looks like a recipe for a well-regulated product.
This is as compliant a product as possible in the United States, a jurisdiction that does not have entirely clear regulatory guidelines. This is also the launch of a fully fiat connected product; PayPal (including Venmo) has nearly 500 million customers, all of whom are already connected to banks and credit card providers.
These customers are also connected to each other, through PayPal’s various fintech platforms, and to approximately 35 million PayPal-accepting merchants in the physical and virtual worlds.
This interconnected network allows consumers to literally take their paycheck and convert it into the PYUSD stablecoin. According to the company’s announcement, PYUSD can be sent to any Ethereum wallet, where it can be exchanged for other cryptoassets, or, alternatively, it can be converted to fiat dollars.
The exact details of PYUSD’s technical functionality have yet to be explored, but this appears to be a significant step in the effort to make cryptocurrencies more accessible to American consumers.
Regulation of Stablecoins America
