PayPal is an international payment system that allows for money transfers and payments online. Recently, the company launched its own stablecoin, PayPal USD (PYUSD), aiming to simplify digital payments, especially within the blockchain ecosystem.

• PYUSD: PayPal's New Stablecoin
• Who is the Issuer of PYUSD?
• Which Blockchains Support the Stablecoin?
• USDT, USDC, and PYUSD: Key Differences
• How to Buy PYUSD in the USA
• Is it Worth Investing in PayPal USD?

PYUSD: PayPal's New Stablecoin

PYUSD is currently available to PayPal customers in the USA and offers a simple way to exchange the stablecoin for US dollars directly on the PayPal platform. Designed for users seeking stability, PYUSD is pegged to the US dollar and fully backed by dollar deposits, short-term US Treasury bonds, and similar cash equivalents. This ensures that the value of PYUSD remains stable relative to the US dollar, even amid cryptocurrency market fluctuations or unforeseen events.

Users can buy, sell, and transfer the PYUSD stablecoin via the PayPal app or website. Additionally, PYUSD can be used for online purchases with supporting merchants, sent to compatible cryptocurrency wallets, or converted into other cryptocurrencies supported by PayPal, such as Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).

PayPal does not charge fees for PYUSD transfers between users, but there are fees for conversions between PYUSD and other cryptocurrencies, as well as for online purchases and withdrawals. These fees are transparently indicated to users during transactions.

Who is the Issuer of PYUSD?

Paxos Trust Company is a regulated blockchain infrastructure company overseen by the New York State Department of Financial Services (NYDFS), making PayPal USD a regulated product.

Previously, Paxos issued Binance USD (BUSD), but ceased due to pressure from the US Securities and Exchange Commission (SEC) and NYDFS following allegations that the stablecoin was an unregistered security.

In June 2022, PayPal received a BitLicense from NYDFS. A BitLicense is a permit that allows companies to engage in cryptocurrency-related activities in New York State. This license allows PayPal to offer cryptocurrency services to customers in New York.

Paxos Trust Company, the issuer of PYUSD on behalf of PayPal, publishes monthly reserve reports detailing the composition of PYUSD reserves. Paxos also provides attestations of the value of PYUSD reserve assets from third-party auditing firms that comply with standards set by the American Institute of Certified Public Accountants (AICPA). This ensures transparency and trust in the stablecoin’s backing.

Which Blockchains Support the Stablecoin?

Initially, PYUSD was launched as an ERC-20 token on the Ethereum blockchain. This means it is accessible to the growing community of external developers and will be supported by many Web3 applications in the future, especially those built on the Ethereum blockchain.

On May 29, 2024, PayPal announced the availability of its PYUSD stablecoin on the Solana blockchain. This move aims to speed up and reduce the cost of PYUSD transactions, providing users with greater flexibility and control through the choice of multiple blockchains.

The speed and scalability of Solana make it an ideal platform for PYUSD, which was created to revolutionize commerce by offering an efficient method of payment. The partnership with PayPal advances Solana's goal of fostering innovation in financial technology.

Users can easily manage PYUSD in their PayPal or Venmo wallets, and when transferring to external wallets, they can choose to use either the Ethereum or Solana blockchain.

Crypto.com, Phantom, and Paxos are the first adopters of PYUSD on the Solana blockchain, allowing users to easily purchase PYUSD directly with fiat currency, providing a simplified experience for both individual consumers and businesses.

USDT, USDC, and PYUSD: Key Differences

Tether (USDT), USD Coin (USDC), and PYUSD are all stablecoins pegged to the US dollar, meaning they aim to maintain a 1:1 ratio with the US dollar.

However, they differ in terms of issuer, transparency, regulatory oversight, and blockchain availability.

• USDT is issued by Tether and is the oldest and most widely used stablecoin but faces criticism regarding its reserves.
• USDC is issued by Circle and is known for its transparency and regulatory compliance.
• PYUSD is the newest stablecoin, issued by Paxos on behalf of PayPal, emphasizing transparency and consumer protection.

While USDT and USDC have large market capitalizations reaching billions of dollars, PayPal USD is rapidly expanding its market cap by leveraging PayPal's vast user base.

Comparison of USDT, USDC, and PYUSD Stablecoins

How to Buy PYUSD in the USA

There are several ways to acquire PayPal USD (PYUSD) in the USA, including purchasing through PayPal, cryptocurrency exchanges, or other wallets and platforms.

Directly through PayPal

Eligible PayPal users can directly purchase PYUSD through their existing PayPal accounts using their balance or linked bank account or debit card. This feature is available via the PayPal app or website.

Cryptocurrency Exchanges

Additionally, cryptocurrency exchanges like Coinbase and Kraken have listed PYUSD, allowing users to acquire it using various payment methods such as bank transfers, debit or credit cards, and other cryptocurrencies.

Other Wallets and Platforms

With the growing popularity of PYUSD, it is also becoming available on other platforms such as Crypto.com and Phantom, offering additional ways to acquire it, such as peer-to-peer trading (P2P) or using other cryptocurrencies.

Steps to Buy PYUSD on Coinbase and Kraken in the USA

To buy PYUSD in the USA, create an account on Coinbase or Kraken, link your payment method, find PYUSD, enter the amount, and confirm the purchase.

Buying PYUSD on Coinbase in the USA

1. Create an account on Coinbase: If you do not already have an account, sign up on Coinbase and complete the necessary verification.
2. Link a payment method: Connect your bank account, debit card, or initiate a bank transfer to your Coinbase account.
3. Find PYUSD: In the Coinbase search bar, type "PYUSD" and select it from the results.
4. Enter purchase amount: Enter the amount of PYUSD you want to buy in US dollars or the equivalent in your local currency.
5. Review and confirm: Check the purchase details, including the amount, fees, and total cost. Confirm the purchase to complete the transaction.
6. Store PYUSD: After the purchase, your PYUSD will be available in your Coinbase wallet. You can keep it there or transfer it to an external wallet.

Buying PYUSD on Kraken in the USA

1. Create an account on Kraken: Sign up on Kraken and complete the necessary identity verification.
2. Deposit funds: Fund your Kraken account in US dollars or other supported currencies using a bank transfer, debit or credit card, or other available methods.
3. Navigate to the PYUSD trading pair: In the Kraken interface, find the PYUSD/USD or PYUSD/EUR trading pair.
4. Place a buy order: Enter the amount of PYUSD you want to buy and set your desired price. You can choose between market orders (executed immediately at the current market price) or limit orders (executed when the price reaches your specified level).
5. Review and confirm: Check your order details and confirm the purchase.
6. Receive PYUSD: Once your order is executed, PYUSD will be credited to your Kraken account. You can keep it there or withdraw it to an external wallet.

Storing PYUSD

After purchasing PYUSD on Coinbase or Kraken, users can store it in their exchange accounts' wallets. However, for increased security, you can transfer PYUSD to a self-custody wallet that supports the Ethereum or Solana blockchain, depending on where you purchased PYUSD. This allows users to have full control over their private keys and assets, minimizing the risk of exchange hacks or restrictions.

Is it Worth Investing in PayPal USD?

PYUSD is not a typical investment like stocks or other cryptocurrencies where price appreciation is expected.

The primary function of PYUSD is to maintain a stable value pegged to the US dollar. Due to its stability, it can be a prudent choice for preserving wealth within the cryptocurrency space or for ensuring easy transactions within the PayPal ecosystem and possibly other platforms as its usage develops.

Additionally, holding PYUSD can diversify a cryptocurrency portfolio and reduce overall volatility. However, PYUSD is not suitable for investors seeking significant returns. Potential investors should also be aware of the evolving regulatory landscape for stablecoins and concerns about centralization, even with Paxos’ efforts to ensure transparency.

The decision to use PYUSD ultimately depends on individual risk tolerance and financial goals. If stability and the potential for broader adoption in payments are your top priorities, PYUSD is worth considering. However, if the goal is to achieve high returns, other investment options should be explored.