The company says that PYUSD will be able to support quick fund transfers for various purposes, such as remittances. PayPal has also indicated that the new cryptocurrency will be compatible with Web3 environments and will eventually be available on Venmo.
The move to support Web3 seems to be a strategic one for PayPal as Web3 is widely hailed as the next generation of the internet. With Web3 frameworks being built atop blockchain technology, cryptocurrencies are set to play a crucial role in facilitating transactions within these ecosystems.
In Web3 environments, users will have more control over their data, interactions and digital identity. Cryptocurrencies will help to shape the way people transact and support online platforms and creators.
They will do this by enabling secure and direct peer-to-peer transactions in Web3, thereby eliminating the need for intermediaries, such as banks or payment processors. This will translate to faster, more efficient and more cost-effective transactions and higher earnings for creators.
By announcing its intention to support Web3, PayPal seems to be setting itself up to be a major player in the next generation of the internet by allowing PYUSD to be used for payments and transfers in virtual settings.
Notably, PayPal USD is an ERC-20 token. This implies that it will be available to a growing community of external developers and supported by many Web3 applications in the future, especially those built on the Ethereum blockchain.
PayPal’s decision to make its own stablecoin is seen as a natural progression for the company. This is because the company has been gradually expanding its cryptocurrency offerings in recent years. The launch of PayPal USD is a significant step forward.
Currently, PayPal USD is issued and managed by Paxos Trust Company, a regulated blockchain infrastructure firm that is subject to the oversight of the New York State Department of Financial Services (NYDFS), meaning that PayPal USD is a regulated product.
Paxos previously issued Binance USD (BUSD) but stopped due to pressure from the U.S. Securities and Exchange Commission and the NYDFS after it was alleged that the stablecoin was an unregistered security.
In June 2022, PayPal was granted a BitLicense by the NYDFS. A BitLicense is a permit that allows businesses to engage in cryptocurrency-related activities in the state of New York. PayPal’s BitLicense permits the firm to provide cryptocurrency services to customers in the state of New York.
Starting in September 2023, Paxos will begin publishing a monthly Reserve Report for PYUSD that will openly detail the components that make up the stablecoin’s reserves. Additionally, Paxos will provide a third-party validation of PayPal USD’s reserve holdings. This verification will be executed by an impartial accounting firm unrelated to the parties involved in accordance with the standards defined by the American Institute of Certified Public Accountants.