PayPal Launches Cryptocurrency Pegged to U.S. Dollar

On Monday, PayPal, a company that builds financial infrastructure, released PayPal USD (PYUSD), a stablecoin tied to the value of the U.S. Dollar.

A stablecoin is a type of cryptocurrency that is tied to the value of a fiat currency and is usually backed by it at a 1:1 ratio. This is meant to make it less volatile than popular choices like Bitcoin and Ether.

The company said that PayPal USD was made by the Paxos Trust Company and was “100% backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents.”

Buyers of PayPal USD will be able to move PayPal USD between PayPal and compatible external wallets, make person-to-person payments using the stablecoin, pay with PayPal USD, and convert any of PayPal’s approved cryptocurrencies to and from the stablecoin.

PayPal Launches Cryptocurrency Pegged to U.S. Dollar

“PayPal USD is designed to reduce friction for in-experience payments in virtual environments, make fast transfers of value to help friends and family, send remittances, or make international payments, allow direct flows to developers and creators, and encourage the world’s biggest brands to keep expanding into digital assets,” the company said in a press release, adding that PYUSD would soon be available on Venmo.

Stable coins like Tether (USDT) and USD Coin (USDC) are popular in countries where the value of the local currency is falling. To protect their savings, people in these countries change their savings to cryptocurrencies that are more stable. But people have asked questions about how well these assets are backed and why their issuers aren’t being more open.

This issue came to light when the Terra USD (UST) stablecoin almost lost all of its value in 2022.

The new stablecoin from PayPal was not yet listed or tracked on CoinMarketCap, which is a famous site for keeping track of crypto coins.

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