PYUSD is a stable coin from the payment giant PayPal

On Monday, August 7, one of the largest PayPal payment systems announced that it has launched its own PayPal USD (PYUSD) stablecoin. The news caused a lot of noise. We will figure out what a stable coin is and how it was reacted to.

What is known about PayPal USD

The payment system is not the first one who decided to start issuing stable coins. The company is quite confident in its own capabilities, as it has a worldwide reputation and a significant audience.

The PYUSD stablecoin will be backed not only by the dollar, but also by short-term US Treasury bonds and other equivalents.

The issue of a stable coin is not only an ambitious decision, but also an attempt to strengthen the control of the payment system in the field of cryptocurrency transactions.

The company wants to use a stable coin to unite users, sellers and developers, thereby connecting fiat with cryptocurrency. Theoretically, this step is logical for the payment system, but in practice it is not known how it will turn out.

PyUSD is released on the basis of Ethereum according to the ERC-20 standard. It will be used to conduct transactions within the PayPal payment system. The company PAXOS was chosen as the issuer, which was also engaged in the issue of the Binance BUSD stablecoin. However, at the request of the American regulator, it stopped issuing.

The PYUSD rate will depend entirely on the US dollar. First of all, a stable coin will become available to citizens and customers of their USA. 

The CEO of PayPal told Bloomberg that the company wants to maintain its leadership in digital payments. Over the past year, online payments have fallen by 35%. 

The stable coin will be available for exchange both for the fiat dollar and for other digital assets that are in the wallets of the payment system. It will also be possible to pay for purchases using a coin using a Venmo wallet. It was also developed by PayPal. In addition, the token will become available for transfer to crypto wallets of other services that do not belong to the payment system.

At an early start, the company expects that the coin will be used in the crypto industry and Web 3.0. For example, to exchange for other coins or to make a payment in some game. The spread to monetary transactions and micropayments will be much later.

Note that a stable coin from PayPal has been talked about for a long time. The rumors started in 2021 with Bloomberg. Then the publication referred to its anonymous sources in the company. the following year they were also repeated, and in the winter of this they were confirmed. However, the company announced in February that it would postpone the launch due to the negative attitude of American regulators to cryptocurrencies.

Fees and restrictions

The stablecoin User Agreement has already been published. It says that the issuer will share profits with PayPal, but this does not apply to users. Also, the payment giant will charge fees for conducting operations with a stable coin within its ecosystem. For example, if you convert PYUSD to BTC in the amount of $ 100, you will need to pay $ 2.5 or 2.5%.

The commission will vary depending on the amount:

  1. Up to $9.99 — $0.49
  2. Up to $29.99 — $0.99.
  3. Up to 79.99 — $1.99.
  4. Up to $249.99 — $2.49.
  5. Up to $1,000 — 1.75% of the amount.
  6. More than $1,000 — 1.45% of the amount.

Users should also be prepared not only for commissions, but also for restrictions. Firstly, at an early stage PYUSD will be available only to Americans, and then not to everyone. You need to go through the verification procedure. Each operation will also undergo moderation. If the company suspects something, the funds will be withheld until the administration figures it out.

That's not all. PayPal has reserved the right to restrict users' access to the cryptocurrency hub. He can also put restrictions on transactions. In addition, the payment giant decided to absolve itself of responsibility for the safety of the coin, as well as for ensuring the rate of 1 to 1. Paxos is allegedly responsible for these nuances.

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