PayPal has introduced a U.S. dollar-pegged stablecoin amid new regulations around digital currencies.
Announced Monday (Aug. 7), PayPal USD is “designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents,” the company said in a news release.
The coin, redeemable 1:1 for U.S. dollars and issued by Paxos Trust Co., lets customers fund purchases with PayPal USD by choosing it at checkout, and convert any of the cryptocurrencies supported by PayPal to and from PayPal USD.
“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,” Dan Schulman, president and CEO, PayPal, said in the release.
“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.”
The launch was praised by U.S. Rep. Patrick McHenry, a North Carolina Republican who heads the House Financial Services Committee.
“This announcement is a clear signal that stablecoins — if issued under a clear regulatory framework — hold promise as a pillar of our 21st-century payments system,” McHenry said in a Monday news release.
“Clear regulations and robust consumer protections are essential to enabling stablecoins to achieve their full potential. That’s why it’s more important than ever that Congress enact legislation to provide comprehensive digital asset regulation, especially for stablecoins.”
The stablecoin bill ran into opposition late last month, with McHenry and the White House blaming each other for the impasse. Still, the chairman said the legislation has support on both sides of the aisle.
“This is a strong product that includes both Republican and Democratic feedback,” McHenry said. “I have confidence that it accomplishes our shared goal — to provide a clear regulatory framework for the issuance of payment stablecoins — and believe it deserves bipartisan support.”
Reports that PayPal was exploring a stablecoin emerged earlier this year, though the company had paused those efforts amid heightened scrutiny around the crypto industry.
“In addition to building products and services that add utility to digital currencies, PayPal is focused on increasing consumer and merchant comprehension of cryptocurrencies, stablecoins and central bank digital currencies (CBDCs), while working closely with regulators as the industry evolves,” the company said in Monday’s news release.
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