The significant forces powering PayPal's multibillion-dollar cryptocurrency endeavor
PayPal's USD-pegged stablecoin, PYUSD, has experienced remarkable growth, surpassing $1bn in market capitalisation. This surge can be attributed to PayPal's strategic integration of the stablecoin within its widely used payment and commerce ecosystem, offering merchants and consumers versatile, low-cost, and fast payment options.
Launched to PayPal customers in the US a year ago, PYUSD has seen an impressive Year-on-Year (YoY) growth of around 2000%. The stablecoin was quickly added to exchanges, enabling users beyond the PayPal ecosystem to buy and sell it.
The launch of PYUSD on the Solana blockchain was a key contributor to its growth, with more than 60% of PYUSD now being on Solana. This move facilitated near-instant cross-border payments and reduced transaction fees, making PYUSD an attractive option for both merchants and consumers.
PayPal's stablecoin competes in a rapidly growing stablecoin market, with Tether's USDT remaining the market leader, dwarfing other stablecoins in terms of market cap. However, PYUSD benefits from its backing by Paxos with fully reserved U.S. dollars and U.S. Treasuries, offering stability and fixed redemption at $1 per PYUSD token. This ensures trust and reduces price volatility and market risk perceptions.
Stablecoins like PYUSD serve as a bridge linking traditional fiat currencies and cryptocurrencies, offering stability, liquidity, and programmability that traditional fiat cannot provide alone. They facilitate faster, cheaper cross-border payments, expand global commerce and financial inclusion, provide stable and transparent digital settlement infrastructure, and support programmable money use cases.
PayPal's SVP of Blockchain, Crypto and Digital Currencies, Jose Fernandez da Ponte, stated that stablecoins will help revolutionize commerce globally. Despite Tether's USDT's popularity as a non-volatile value store for retail crypto investors, it is not sufficiently regulated to see widespread use by the cross-border payments industry.
The combined market capitalization of the three major US-dollar pegged stablecoins (Paxos's USDP, Circle's USDC, and PayPal's PYUSD) increased by around 130% YoY to $36bn at the end of August. While USDP has been experiencing a decline in market cap over the past year, Circle's stablecoin accounts for a significant portion of the total market cap of the stablecoins mentioned.
The growth of PYUSD and the stablecoin market as a whole underscores the potential for cryptocurrencies to transform the payments industry, offering faster, cheaper, and more inclusive financial services to a global audience.
[1] PayPal's Cryptocurrency Hub: https://www.paypal.com/uk/webapps/mpp/crypto-buysell [2] Paxos's Stablecoin Backing: https://paxos.com/products/stablecoin [3] Xoom Remittances with PYUSD: https://www.xoom.com/us/en_US/send-money/cryptocurrency/ [4] PayPal World: https://www.paypal.com/us/webapps/mpp/paypal-world [5] Stablecoins and Financial Inclusion: https://www.circle.com/en/insights/stablecoins-financial-inclusion
- The growth of PayPal's stablecoin, PYUSD, can be largely attributed to its integration within PayPal's widely used payment and business ecosystem, offering versatile, low-cost, and fast payment options, as well as its launch on the technology-driven Solana blockchain, which facilitated near-instant cross-border payments and reduced transaction fees.
- The rapid growth of PYUSD and the stablecoin market as a whole highlights the potential for technology in cryptocurrencies to significantly transform the finance and business sectors, offering faster, cheaper, and more inclusive financial services to a global audience.
