© Reuters
Investing.com — PayPal (NASDAQ:) has become the first major financial services company to launch its own stablecoin, as the group seeks to drive adoption of digital tokens for payments.
The stablecoin, known as PayPal USD, will be backed by deposits, short-term treasury bills and similar cash equivalents, PayPal announced on Monday. The Paxos trust company will issue the PayPal USD.
Stablecoins, a type of crypto token tied to an asset like the dollar, have been around for almost a decade, but they’ve mostly been used to facilitate transfers between merchants rather than consumer payments. According to CoinGecko data cited by Bloomberg, approximately $126 billion worth of stablecoins are currently in circulation.
Dan Schulman, Chairman and CEO of PayPal, said in a statement that PayPal USD can provide “the foundation to help drive the growth of digital payments” through stablecoins.
“The shift to digital currencies requires a stable instrument that is both digital and easily connected to a fiat currency like the US dollar,” Schulman said.
Starting today, eligible customers in the US will be able to purchase PayPal USD to transfer between PayPal and external wallets, send person-to-person payments, and fund purchases. All cryptocurrencies supported by PayPal will also be able to be converted to PayPal USD, the San Jose-based group said.
The move comes as PayPal, which has been hit by a slowdown in online spending after the pandemic, tries to bolster the digital payment options available to its customers. The company’s stock price rose early Monday in the US, but is down more than 34% over the past twelve months.
Meanwhile, Jose Fernandez da Ponte, head of PayPal’s blockchain and digital currencies team, told Bloomberg that the regulatory environment surrounding stablecoins is becoming clearer. PayPal previously halted work on PayPal USD due to increased scrutiny of stablecoins by regulators.