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Payments behemoth PayPal plans to offer a 3.7% yield on balances held in its PayPal USD stablecoin.<\/p>\n
According<\/a> to an April 23 Bloomberg report, a PayPal representative said that the measure aims to encourage more usage of the firm\u2019s stablecoin. The program is expected to launch this summer, and the rewards will also be paid out in PayPal USD (PYUSD<\/a>).<\/p>\n Users will be able to exchange PYUSD for fiat currency, spend it or send it to other users. The rewards will accrue daily and will be paid on a monthly basis. The company hopes this feature will lead to a higher predominance of stablecoin and crypto payments on its platform.<\/p>\n The report follows PayPal USD reaching a $1 billion market cap in the summer of 2024<\/a>. As of publication, the stablecoin\u2019s market cap is nearly a quarter lower at $873.3 million.<\/p>\n Tzahi Kanza, CEO of crypto investment firm Syndika, told Cointelegraph that \u201cfrom a regulatory standpoint, PayPal must ensure that offering interest doesn\u2019t cause its stablecoin to be classified as a security. \u201cWhen it comes to financial risks for the users, he said that PayPal can keep its promises, and the main risk is losing the peg to the dollar rather than interest-related issues. He said:<\/p>\n \u201cStablecoins that don\u2019t offer yield are generally not considered securities. However, yield-bearing stablecoins may fall under that classification.\u201d<\/p><\/blockquote>\n Related: <\/strong><\/em>PayPal\u2019s Xoom launches cross-border stablecoin settlement<\/strong><\/em><\/a><\/p>\n PayPal is betting on blockchain technology with its continued product development. Reports from earlier in April show that PayPal has expanded its cryptocurrency offerings<\/a> to include Chainlink (LINK<\/a>) and Solana (SOL<\/a>), giving US-based users the ability to buy, sell and transfer the popular tokens.<\/p>\n In fact, PayPal was cited by Polygon Labs CEO Marc Boiron as one of the catalysts for the stablecoin industry\u2019s rapid growth<\/a> in recent years. In an interview with Cointelegraph, Boiron said, \u201cCompanies like Stripe and PayPal integrating stablecoins is likely the primary catalyst for their growth.\u201d<\/p>\n Related: <\/strong><\/em>PayPal, Ernst & Young settle first corporate payment via PYUSD stablecoin<\/strong><\/em><\/a><\/p>\n PYUSD is a US dollar-pegged stablecoin issued<\/a> by Paxos Trust Company on behalf of PayPal in August 2023. At the time of the launch, PayPal became the first major payment network to launch its own stablecoin, with Venmo rolling out support in September 2023.<\/p>\n Each token is purportedly backed one-to-one by cash deposits, short-term US Treasury notes and similar cash-equivalent assets in accounts overseen by the New York State Department of Financial Services. Initially, PYUSD was a token compliant with the ERC-20 Ethereum standard, but has since also been deployed<\/a> on Solana (SOL<\/a>).<\/p>\n PayPal USD\u2019s current market cap is still a far cry from the top stablecoin, Tether\u2019s USDt (USDT<\/a>). At the time of writing, CoinMarketCap data<\/a> shows that USDT\u2019s market cap stands at $145.3 billion, over 17,255% higher than PYUSD\u2019s. Kanza said that \u201cTether\u2019s strength lies in its market dominance \u2014 not in its regulatory compliance, transparency, or yield\u201d since it does not offer those. He added:<\/p>\n \u201cTo compete effectively, targeting these three areas \u2014 compliance, transparency and returns \u2014 would be a smart strategy [for PayPal.]\u201c<\/p><\/blockquote>\nPayPal is betting on crypto<\/h2>\n
The story of PayPal USD<\/h2>\n