By launching a stablecoin, PayPal is trying to get a piece of the growing cryptocurrency market.
PYUSD will be able to support fast fund transfers for various purposes, such as remittances, the company said. PayPal also stated that the new cryptocurrency will be compatible with the Web3 environment and will eventually be available on Venmo.
The move to support Web3, which is widely hailed as the next generation of the Internet, appears to be a strategic move for PayPal. With the Web3 framework built on blockchain technology, cryptocurrencies will play a vital role in facilitating transactions within these ecosystems.
In a Web3 environment, users will have more control over their data, interactions, and digital identities. Cryptocurrencies will help shape the way people transact and empower online platforms and creators.
They will do this by enabling secure and direct peer-to-peer transactions in Web3, eliminating the need for intermediaries such as banks or payment processors. This will lead to faster, more efficient, cost-effective transactions and higher revenue for creators.
By announcing its intention to support Web3, PayPal appears to be establishing itself as a major player in the next generation of the Internet by allowing PYUSD to be used for payments and transfers in a virtual environment.
It is worth noting that PayPal USD is an ERC-20 token. This means it will be available to a growing community of external developers and will be supported by many Web3 applications in the future, especially those built on the Ethereum blockchain.
PayPal’s decision to develop 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 major step forward.
Currently, PayPal USD is issued and managed by Paxos Trust Company, a regulated blockchain infrastructure company regulated by the New York State Department of Financial Services (NYDFS), which means that PayPal USD is a regulated product.
Paxos had previously issued Binance Dollars (BUSD), but stopped it under pressure from the SEC and NYDFS due to the stablecoin allegedly being an unregistered security.
In June 2022, PayPal received a BitLicense issued by NYDFS. A Bit License is a license that allows businesses to engage in cryptocurrency-related activities in New York State. PayPal’s BitLicense allows the company to offer cryptocurrency services to customers in New York State.
Beginning September 2023, Paxos will begin publishing monthly reserve reports for PYUSD, which will publicly detail the components that make up the stablecoin reserve.In addition, Paxos will provide third-party verify PayPal USD reserve holdings. This verification will be performed by an impartial accounting firm independent of the parties in accordance with standards established by the American Institute of Certified Public Accountants.
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