This is a proud moment for the Paxos team. As the leading regulated blockchain infrastructure provider, we serve some of the largest enterprises in the world, power wallets for more than 400 million end users and enable tokenized settlement worth hundreds of billions of dollars. The introduction of PayPal USD (“PYUSD”) makes Paxos the global leader in tokenization.
The PYUSD launch represents a seminal moment for blockchain and financial services. PYUSD is the first US dollar-backed stablecoin launched by a global payments company and a household brand. The August 7th launch will usher in a new wave of mainstream use cases and global adoption for stablecoins.
Until now, stablecoin growth was driven by cryptocurrency trading and DeFi activity. There has been very little adoption beyond the blockchain ecosystem itself. Yet, most enterprises recognize the potential in stablecoins and their ability to transform how currency access holds and moves currency broadly.
Stablecoins are going mainstream
In the same way that we saw large fintechs, banks and brokerages around the world follow in the footsteps of PayPal’s crypto launch in the fall of 2020, we expect PYUSD to be another catalyst for companies across tech and financial services to integrate stablecoins into their products.
Billions of people will eventually be able to access stablecoin technology through the applications they trust and use every day. That access will unleash the potential of USD stablecoins in ways we can’t even imagine today. PYUSD will usher in new use cases for stablecoins in payments for goods and services as well as remittances. This product will make global access to dollars seamless.
The foundation of PYUSD is trust. In addition to PayPal’s brand creating trust and awareness, PYUSD is powered by the most comprehensively regulated infrastructure in the market, the Paxos platform. This new stablecoin cements the Paxos / PayPal model as the new gold standard for asset-backed token issuance and the entrance of enterprises into the digital asset ecosystem. Any stablecoin hereafter will compete with the four pillars of the Paxos standard:
- Prudential oversight
- Fully reserved
- Protected from bankruptcy
- Always available for redemption
A victory for prudential regulation
PYUSD is a fully regulated token with prudential oversight by the New York State Department of Financial Services (“NYDFS”) and issued by Paxos Trust Company. This is a key differentiation of PYUSD versus earlier iterations of stablecoins, such as in USDC and USDT.
Prudential oversight guarantees that no matter where you are in the world, you are assured your stablecoins are safe and only available to you. While you can trust Paxos and PayPal, you do not have to – a well-respected government regulator is making sure we follow strict rules for issuance and management. This is a level of consumer protection unique to Paxos-issued digital assets.
Under NYDFS oversight, trust companies like Paxos must hold stablecoin reserves in bankruptcy remote, fully-segregated accounts and only in cash and cash equivalents. Paxos also issues monthly reserve reports disclosing the instruments backing PYUSD. Paxos follows all NYDFS guidelines for the issuance, redemption and reserve composition of its stablecoins. In partnering with Paxos, PayPal ensures PYUSD is the safest dollar-backed digital asset available to consumers globally.
PayPal & Paxos are building the future of finance
Together, Paxos and PayPal have created a product which represents the beginning of a new era of stablecoins. PYUSD will grow the reach and influence of the US dollar by making it more readily accessible to unbanked populations. Our stablecoins will also allow underbanked individuals to access the US dollar (while in permissible jurisdictions) more quickly and easily. And our stablecoins will help remove the need for consumers to have a US bank account to access dollars (where legally permitted).
Soon stablecoins will be used in new and unique ways throughout all aspects of commerce. And when issued by Paxos Trust Company, people can always trust that their stablecoins are just like physical dollars in their pocket. That is the future of finance.