PayPal’s US dollar-pegged stablecoin, PayPal USD (PYUSD), has crossed the $1 billion mark in total market capitalization, according to data from CoinMarketCap. Launched in 2023, this stablecoin is backed 1:1 by US dollars and issued by Paxos Trust Company, a US-regulated crypto custodian.
PayPal USD Competing in the Stablecoin Market
PYUSD competes with other regulated, dollar-backed stablecoins, such as Circle’s USD Coin (USDC). In a 2023 statement, Dan Schulman, PayPal’s president and CEO, highlighted the need for a stable digital currency linked to the US dollar. PYUSD, an ERC-20 token, is the only stablecoin supported on PayPal’s payment system. It’s designed for use by developers, wallets, and Web3 applications, making it easy for cryptocurrency exchanges to adopt.
PayPal is actively working to expand the accessibility of PYUSD. It has partnered with Anchorage Digital to offer rewards to clients who store PYUSD with the crypto custodian. In May, PayPal launched PYUSD on the Solana blockchain, collaborating with Crypto.com, Phantom, and Paxos to onboard users. Additionally, PayPal teamed up with Web3 infrastructure provider MoonPay to allow users to buy cryptocurrency with a PayPal account. This partnership also helped bring users to the crypto betting platform Polymarket in July.
Competition from Tether and USDC
Despite its growth, PYUSD remains far behind the leading dollar-pegged stablecoins, Tether (USDT) and USDC. Tether and USDC hold market capitalizations of nearly $118 billion and $35 billion, respectively, according to CoinMarketCap. Coinbase, which offers around 5.2% annual yield on USDC, also incentivizes users to hold stablecoins on its platform.
