PayPal has launched a US dollar stablecoin for Web3 and digital payments.
PayPal said that the new digital currency, which can be redeemed 1:1 for US dollars, will be compatible with widely used exchanges, Web3 apps, and digital wallets, including Venmo.
PayPal USD (PYUSD) is backed by US dollar deposits, short-term US treasuries and cash equivalents.
Users will be be able to transfer the token to external wallets, transfer funds to other people, pay for purchases and convert PayPal USD to and from supported cryptocurrencies.
"The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar," said Dan Schulman, president and chief executive of PayPal. "Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD."
PayPal USD is issued on the Ethereum blockchain and managed by the Pazos Trust company.
In a bid to build trust among users, Paxos will publish a public monthly report which will detail the amount of assets that back the new stablecoin. It also said it would issue proof of the value of PayPal USD reserve assets, and ensure the proper procedures are being followed.
In February this year PayPal paused work on its stablecoin due to increased scrutiny of cryptocurrencies from global regulators.
Paxos also faced an investigation by the New York State Department of Financial Services over issuing a stable coin branded by crypto exchange Binance, which cast doubt over the project.
PayPal received a ‘BitLicense’ from the Department of Financial Services in 2022, with the company claiming that it was the first to convert a conditional BitLicense into a full one.
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