San Francisco-based Kraken exchange takes a step towards merging traditional and digital finance by introducing PayPal’s USD stablecoin (PYUSD) for trading.
Key Points
- Kraken adds PayPal USD (PYUSD) for trading from August 21, bridging traditional and digital finance.
- PayPal introduces PYUSD stablecoin on August 7, targeting innovation in web3 payments.
- PYUSD features include transfers, person-to-person payments, funding purchases, and crypto conversion.
- PayPal’s entry into stablecoin sector highlights profitability, while PYUSD aims to blend fiat and web3 realms with transparency and regulation.
San Francisco-based cryptocurrency exchange, Kraken, has recently announced the addition of a new financial instrument to its platform.
Starting from August 21, users will be able to trade PayPal USD (PYUSD) on the exchange. This move represents a significant step towards the integration of traditional and digital financial systems.
📣 New token available: $PYUSD @PayPal 🅿️
✔️ Deposits and withdrawals enabled
✔️ Trading starts on August 21Learn more 👉 https://t.co/TpKTyTVC4p pic.twitter.com/QNyBfRxorG
— Kraken Pro (@krakenpro) August 18, 2023
PayPal’s Introduction of PYUSD
On August 7, 2023, PayPal, the renowned payment giant, unveiled its U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), in San Jose, California.
With PYUSD, PayPal aims to revolutionize payments in web3 environments and other digitally native settings.
Features and Functionality of PayPal USD
PayPal USD is a stablecoin that offers the advantages of stablecoins in payments. It is backed by 100% U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents, ensuring a 1:1 redemption rate for U.S. dollars. Issued by Paxos Trust Company, PYUSD provides several functionalities:
- Users can transfer PYUSD between their PayPal accounts and compatible external wallets.
- Person-to-person payments can be conducted using PYUSD.
- Purchases can be funded at checkout using PYUSD.
- Conversion between PayPal-supported cryptocurrencies and PYUSD is possible.
PayPal CEO, Dan Schulman, emphasized the significance of this new asset and stated, “Our commitment to responsible innovation and compliance, along with our history of pioneering unique experiences for our clientele, is the groundwork for digital payments growth via PayPal USD.”
Profitability of Stablecoins
Stablecoins have been gaining profitability, as demonstrated by Tether’s Q2 2023 operational profit of over $1 billion. PayPal’s entry into the stablecoin market indicates the immense potential and profitability of this sector.
PayPal USD aims to be more than just a stablecoin. It aims to serve as a connection between the traditional fiat world and the dynamic web3 realm.
Built as an ERC-20 token on the Ethereum blockchain, PYUSD is designed to be accessible to developers, web3 apps, wallets, and exchanges.
Its integration with the web3 ecosystem ensures compatibility with platforms like Venmo from day one.
The goal is to reduce payment friction in virtual landscapes, expedite transfers, and establish direct financial conduits for developers and creators.
Concluding Thoughts
To ensure credibility and trust, the PayPal USD stablecoin is issued by Paxos Trust Company and regulated by the New York State Department of Financial Services.
From September 2023, Paxos will release a monthly Reserve Report that provides details of the reserves backing the stablecoin.
Third-party attestation will be provided by an independent accounting firm, following the guidelines set by the American Institute of Certified Public Accountants (AICPA).
