It is the first so-called “stable” cryptocurrency deployed by a large company specializing in online payments. PayPal launched a dollar-peg stablecoin, PayPal USD, on Monday, August 7, as the cryptocurrency industry comes under scrutiny from regulators.
PayPal users will be able to buy PayPal USD, transfer it to other digital wallets, convert it to other cryptocurrencies, use it to pay online or to pay money to loved ones, the group said. Californian in a press release.
“The transition to digital currencies requires a stable instrument, which is born online and easily connects to fiat currencies like the US dollar,” Dan Schulman, PayPal’s CEO, said in the statement.
A stable price
“Stablecoins” are cryptocurrencies: transactions are recorded on a decentralized ledger, the “blockchain”, and not by a bank as for conventional currencies.
But, while cryptocurrencies like bitcoin and ether see their prices fluctuate wildly, the creators of stablecoins aim for a stable price. PayPal thus promises parity with the dollar, thanks to reserves in this currency.
But stablecoins have not been spared from the problems in the sector. The prices of some of them faltered when cryptocurrency prices plunged in the spring.
In mid-February, a US regulator ordered Paxos to stop issuing a stablecoin, BUSD, in Binance’s name. It was the first blow to the largest platform for buying cryptocurrencies, since accused by the American stock market policeman, the SEC, of having circumvented the regulations.
Facilitate cryptocurrency exchanges
PayPal has also chosen Paxos to issue its own stablecoin. The company will have to publish monthly reports on its reserves, which will be audited.
For now, stablecoins are mainly used to facilitate the exchange of cryptocurrencies between them by investors, without having to go through a bank, which makes them an essential cog in the crypto sector. They also give users access to a product pegged to the dollar without having a bank account in the United States.
“PayPal USD is designed to reduce friction in payments in virtual environments, facilitate transfers to help friends and family, send funds or make international payments, enable direct flows to developers and creators, and fostering the expansion of digital assets by the world’s biggest brands”, summarizes PayPal.
As authorities look for ways to better regulate cryptoassets and several major platforms have gone bankrupt, Sam Altman, the boss of OpenAI (ChatGPT) last month launched a new cryptocurrency, Worldcoin, equipped with a verification system. identity from the human iris.