On September 25, PayPal announced that its Business accounts can now buy, sell, and trade cryptocurrencies directly from their PayPal accounts. This new feature is available for U.S. merchants, except those based in New York.
PayPal’s Response to Demand
Jose Fernandez da Ponte, PayPal’s senior vice president of blockchain, cryptocurrency, and digital currencies, shared insights on this move. He explained, “Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers. We’re excited to meet that demand by delivering this new offering, empowering them to engage with digital currencies effortlessly.”
PayPal also allows businesses to withdraw their crypto to external wallets or store it securely in cold storage.
The Launch of PYUSD Stablecoin
In August 2023, PayPal launched its own stablecoin, PYUSD, which is backed by U.S. dollar deposits and short-term cash equivalents. The PYUSD is fully redeemable at a 1:1 ratio with the U.S. dollar, making it a reliable digital dollar for users.
To reduce transaction costs, PayPal extended the PYUSD stablecoin to the Solana network. Solana’s lower fees make it easier for users to make smaller payments, like buying coffee or lunch. For instance, Solana’s fees can be as low as $0.0025, compared to much higher costs on Ethereum, especially during busy periods.
PayPal also introduced a feature called “confidential transactions” for PYUSD on Solana. This keeps the payment amount private while allowing the transaction details to remain visible for regulatory compliance.
PYUSD Market Growth
While PYUSD has seen significant growth, reaching a $1 billion market cap, it still trails behind Tether and Circle’s stablecoins. As of August 2024, Tether leads with a market capitalization of $118 billion, and Circle’s stablecoin follows with $35 billion.
