PayPal launches PYUSD stablecoin backed by the US dollar

PayPal is launching its own stablecoin: PayPalUSD (PYUSD). The company says the cryptocurrency token is “fully backed by U.S. dollar deposits” and can be bought or sold on PayPal’s app or website at $1.00 per PYUSD.

With PYUSD, you can make person-to-person payments, fund purchases with the currency at checkouts, and transfer PYUSD between PayPal and other outside wallets. PayPal says that you can also convert the currencies supported by PayPal to and from PYUSD as well.

Stablecoins take their name from the fact that they’re centralized and backed by existing government-supported currencies like the US dollar or the Euro. The US government is still hashing out how to regulate stablecoin and other forms of cryptocurrency. After all, stablecoins aren’t always that stable, as we saw with the collapse of Tether and TerraUSD.

PYUSD is launching today and will become available “in the coming weeks” to customers in the US with PayPal Balance accounts. It’ll also be available on the PayPal-owned Venmo app “soon.”

PayPal’s decision to make its own stablecoin doesn’t come as a surprise — PayPal currently lets users buy, transfer, and sell cryptocurrencies in the app, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. It also obtained its New York BitLicense last year, which allows customers in the state to buy and sell cryptocurrency. More broadly, the US government has been exploring the creation of its own digital currency.

The stablecoin is built on Ethereum and issued by the Paxos Trust Company, a firm based in New York that provides a regulated blockchain infrastructure to clients. Paxos was recently ordered to stop offering Binance’s BUSD cryptocurrency as New York regulators crack down on businesses in the crypto industry.

“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 Dan Schulman, the president and CEO of PayPal, in a statement.