PayPal Holdings became the first major U.S. financial institution to launch a stablecoin cryptocurrency, the online payments giant announced early Monday. PYPL stock rebounded after a four-day drop.
PayPal launched PayPal USD token (PYUSD), a U.S. dollar-backed stablecoin, to facilitate cryptocurrency payments. Stablecoins are cryptocurrencies whose value is pegged to another asset to maintain its price at a certain value, often $1.
Paxos Trust Company will issue PayPal USD on the ethereum blockchain. PayPal customers will be able to transfer the stablecoin to external wallets, fund purchases and send payments with PYUSD, and convert supported cryptocurrencies to and from PYUSD.
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"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," said PayPal CEO Dan Schulman. "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."
PayPal USD reserves are fully backed by U.S. dollar deposits, Treasuries and similar cash equivalents, the company said. Starting in September, Paxos will provide monthly updates on reserve assets, which will be reviewed by an independent, third-party accounting firm.
Rollout will begin in the coming weeks. PYUSD will be the only stablecoin supported by the PayPal network, the company said.
PYPL Stock
PYPL stock surged 2.7% to 64.42 Monday. PayPal stock tumbled last week after its narrow Q2 earnings beat as the company continues its search for a new CEO. Schulman plans to retire at the end of the year but will continue serving on the board of directors.
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