What is PayPal USD (PYUSD)

7 Sep 2023 by Rory Kejzerko 1 min read

PayPal USD (PYUSD) is the August 2023-launched stablecoin of global - and sometimes controversial - payments platform PayPal.

Given the ERC-20 token’s stablecoin status, it’s pegged 1:1 to the US dollar. This means that PYUSD is fully backed by USD deposits, short-term US treasuries, and similar cash equivalents.

It’s issued by Paxos Trust- a New York-based FinTech company specialising in cryptocurrency brokerage services, asset tokenization services, and settlement services. The company formerly issued fellow stablecoin Binance USD (BUSD), which it stopped due to FUD-inducing pressure from the US Securities and Exchange Commission (SEC) and its rampant interest in reclassifying crypto coins as ‘unregistered securities’.

Regulation for the coin comes from the New York State Department of Financial Services (NYDFS), who’d be obligated to step-in and save investors if Paxos was to go bankrupt. To avoid this unwanted scenario, Paxos plans to publish a monthly ‘Reserve Report for PYUSD,’ which will include data surrounding the components that make up the coin’s reserves (whilst also providing a third-party validation of its reserve holdings).

PYUSD can be purchased on PayPal directly, as well as across some major crypto exchanges - such as Coinbase and Kraken, however not Binance. PYUSD can also be sent from one PayPal user to another without any fees.

The coin- which launched with the aim of providing frictionless virtual payments via a currency that isn’t impacted by the volatilities of other cryptocurrencies- enters a stablecoin market that’s dominated by the likes of billion dollar coins USD Tether (USDT) and USD Coin (USDC).

However, to set itself up to be a major player in the next generation DeFi game, the payments platform will look to utilise its pre-established 435+ million global user base as a proficient catch-up mechanism.

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