The global financial technology firm, PayPal, has launched a US dollar-denominated stablecoin. The new offering, expected in the coming weeks, was launched in collaboration with stablecoin issuer Paxos Trust Company.
According to the company’s statement, PayPal USD (PYUSD) is a digital asset fully backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents. The token is redeemable at a 1:1 ratio for US dollars and can be bought or sold through PayPal at a rate of USD $1.
PYUSD
Users who purchase PYUSD will be able to transfer the stablecoin between PayPal and compatible digital wallets. The users are able to send PYUSD among themselves or use it for making purchases. Additionally, PYUSD users are able to convert any of the cryptocurrencies supported on the payments network to PYUSD.
Dan Schulman, the President and CEO of PayPal, has praised the new offering saying: "The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar."
PayPal USD is an ERC-20 token issued on the Ethereum blockchain. It is available for consumers, merchants, and developers as a link between fiat and digital currencies. The San Jose, California-based payments firm expects the stablecoin to serve developers and to be supported on wallets and Web 3 applications.
Proof-of-Reserves
According to the statement, Paxos is expected to publish a monthly report with the details of the financial instruments backing PYUSD. This report comprises a public attestation from a third party confirming the value of the financial instruments backing the stablecoin.
Since the collapse of FTX last year, there has been a push for cryptocurrency exchanges to disclose information about the financial reserves of their stablecoins. Binance is among the cryptocurrency exchanges that provide 'proof of reserves' for the public.
Besides that, PYUSD will be available on Venmo, a mobile payments app that was acquired by PayPal in 2013. Some of the cryptocurrencies supported by PayPal that can be traded with PYUSD are Bitcoin (BTC), Bitcoin Cash (BCH), ether (ETH), and Litecoin (LTC).
This article was written by Jared Kirui at www.financemagnates.com.
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