GM, this is your Daily Bolt briefing
PayPal’s foray into the stablecoin scene drew mixed reactions from the crypto crowd. Most market participants will agree, however, that a top Payment Processing fintech like PayPal expressing explicit interest in stablecoins shows institutional demand.
With some seeing this as a potential positive catalyst for the total stablecoin marketcap, it pays off to learn what PayPal has planned…
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1/ Unchained Podcast – PayPal launches $PYUSD Stablecoin
Preview: Laura is joined by Jose of Paypal to discuss the company’s introduction of $PYUSD, its features, use cases and more. Click here to listen to the full episode (39 mins).
Read our Note (5 mins) and save 34 mins.
PayPal's Stablecoin on Ethereum: $PYUSD
Jose (Guest) is the Senior Vice President of Blockchain, Crypto, and Digital Currencies at PayPal.
Jose explains that PayPal's vision for PYUSD is to act as a bridge between traditional fiat currencies and the emerging Web3 ecosystem. The overarching goal is to bring mainstream adoption to this new system for payments.
He emphasizes that PayPal is fundamentally a payments company and is deeply invested in the applications of payments.
He adds that the introduction of PYUSD is seen as a natural progression in their journey in the crypto space.
He says that the company began by enabling traditional crypto tokens within their app. This evolved to on-chain transfers and international transfers, and now, they have introduced PYUSD as a fully backed and regulated stable instrument of value that can be used for payments.
He adds that PYUSD is seen as the culmination of the first phase of their journey in the crypto space.
Jose highlights that, in PayPal's view, stablecoins are currently the "killer application" for blockchains. This is especially true in the context of the payments market, which PayPal is deeply involved in and cares about.
He elaborates on the potential of stablecoins by stating that they are very close to the payments market. This proximity to the payments market and the inherent advantages of stablecoins make them a prime candidate for widespread adoption in the near future.
Expected Use Cases for $PYUSD
Jose highlights that the inherent properties of digital currencies make them particularly well-suited for payments. These advantages include cost, programmability, and settlement time.
Jose says that while the advantages of stablecoins in daily payments are evident, mainstream use for day-to-day transactions might still be a few years away. He adds that the revolution in payment methods using stablecoins won't happen overnight.
Jose identifies several sectors that are ripe for the adoption of PYUSD and other stablecoins. These include crypto trading, Web3 use cases, remittances, B2B payments, and digital goods in gaming platforms.
Jose believes that DeFi will be part of the initial wave of PYUSD adoption. The goal is to cater to where crypto users are currently using stablecoins, and DeFi represents a significant use case for that.
$PYUSD Distribution and Compatibility
Jose says that PYUSD is exclusively available within the PayPal wallet. However, he emphasizes that there are plans in the pipeline to expand its availability.
He says that the intention is to make PYUSD accessible on main cryptocurrency exchanges in the future as this move would increase its distribution and make it more widely available for various use cases.
Jose addresses the capability of PYUSD to be transferred to external wallets. He confirmed that PYUSD can indeed be sent to compatible external wallets.
He says that PYUSD is designed as an ERC-20 token, as a result, it can be transferred to any external wallet that supports ERC-20 tokens. This compatibility ensures that PYUSD can be used and stored in a wide range of cryptocurrency wallets that support the ERC-20 standard.
Differentiating $PYUSD from Other Stablecoins
Jose says that there are several stablecoins in the market, such as USDT and USDC, which are designed similarly to PYUSD. He thinks that several key differentiators for PYUSD make it superior.
He says that PYUSD is the only stablecoin that is integrated into the PayPal ecosystem. He adds that this integration not only covers PayPal but will soon encompass Venmo as well.
He highlights that this integration provides access to PayPal's vast two-sided network, comprising millions of consumers and merchants. As a result, users with a PYUSD balance can utilize it as a funding instrument for transactions with any merchant that accepts PayPal. He adds that this capability is unique to PYUSD and isn't something other stablecoins currently offer.
He says that PYUSD leverages PayPal's established bank connectivity.
He points out that transitioning from fiat to a stablecoin can often be cumbersome, involving multiple steps like moving funds to an exchange, incurring fees, and waiting for withdrawals.
He adds that with PYUSD's support on PayPal, users can seamlessly sell their PYUSD balance, move it to their PayPal balance, and then withdraw it directly to their bank account. This streamlined process offers a significant advantage for both on-ramps and off-ramps.
Jose says that PYUSD is issued by Paxos and has been approved by the New York Department of Financial Services (DFS).
He adds that PYUSD benefits from PayPal's two decades of experience in addressing and preventing online financial crimes and fraud. This long-standing experience in compliance and regulation gives PYUSD an edge in terms of trust and reliability.
Stablecoin Legislation and Regulation
Jose says that PayPal has been closely monitoring the legislative process surrounding stablecoins. He expresses agreement with the sentiment that it's positive to see traction in this area, with bills being discussed and moving forward.
Jose highlights a macro trend where there's growing clarity around stablecoin regulations on a global scale such as Europe, UK, Japan, and Singapore.
He emphasizes that while it's encouraging to see the U.S. moving towards clearer stablecoin regulations, there's already a framework in place.
He elaborates on PayPal's decision to go to New York for $PYUSD because of the state's robust and rigorous framework for stablecoins.
He says that New York's Department of Financial Services (NY DFS) is known for its strict requirements, especially in terms of Know Your Customer (KYC) and Anti-Money Laundering (AML) provisions.
Stay alert, stay informed ⬇
Passionate about web3 products?
Find the best web3 products you can trust.
Smoothie is a review platform for web3. Like Yelp for web3 products!
But we use blockchain technology to verify that real people are writing reviews!
Finally! No more fake reviews!
Whether it's NFTs, DeFi apps, web3 games, or wallets, you'll find reviews for all your favorite web3 products. Search for your product, and get insights straight from the community.
Have an opinion about a web3 product you've used?
Write a review about it today!
Join Smoothie and let your voice be heard. Share your experience with the community and make a real impact.