PayPal has joined the stablecoin wars –by issuing its first native cryptocurrency, Pay Pay USD.
This move makes PayPal the first major U.S. financial company to launch its own U.S. dollar-backed stablecoin. The PYUSD stablecoin was built on the Ethereum blockchain and is issued by Paxos Trust Company, a financial tech company that specializes in blockchain and offers crypto brokerage services.
While stablecoins are not always stable (ie. Terra Luna), stablecoins do offer some relief from the price volatility of other cryptocurrency investments. Stablecoins are typically backed by a physical asset, such as commodities like gold or fiat currencies like the U.S. dollar, which help the stablecoin maintain a relatively consistent price. PayPal’s stablecoin is redeemable 1:1 for U.S. dollars, which means one PayPal USD can be redeemed for one U.S. dollar and vice versa.
No doubt that this news is significant as it pits PayPal in direct competition with stablecoin industry giants, Circle (USDT) and Ifinex, Inc (Tether). In the midst of high regulatory turmoil, this launch is just more confirmation for cryptocurrency's staying power.