PayPal has slowly but surely increased its presence in the crypto space. I reported back in June of last year about PayPal having their Bitlicence and slowly starting to roll out the availability to send crypto for their US customers. And then in November of the same year, they submitted a slue of crypto-related trademarks. And now their latest step is their own stablecoin, PYUSD.
PYUSD by PayPal
According to the PayPal press release, their customers will be able to able to use the new PYUSD stable coin in four ways to start off. These will be rolled out during the coming weeks to PayPal customers who have a PayPal balance account. And what people are able to do is the following
- Transfer PayPal USD between PayPal and compatible external wallets
- Send person-to-person payments using PYUSD
- Fund purchases with PayPal USD by selecting it at checkout2
- Convert any of PayPal's supported cryptocurrencies to and from PayPal USD
In other words, it is nothing unexpected out of the ordinary. The biggest thing however is that it will allow people to use their crypto to make purchases much easier than before. As you now can send supported crypto to your PayPal account, swap it for PYUSD and use that to make a purchase.
According to the press release the PYUSD "is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents". And you are able to always redeem your PYUSD at a 1:1 for the fiat USD, and this will be handled by the Paxos Trust Company. They appear to have been around since 2012 and are a New York-based company specializing in blockchain. This appears to be an expansion of their initial partnership surrounding cryptocurrencies, dating back to 2020.
This is good news as I think most of us have had enough of stablecoins backed by either an algorithm or another crypto.
The good, the bad, and the future
First of I think this is a very good step in spreading awareness about crypto to the masses. And hopefully, it will be able to treasure some of the anti-crypto senators and others due to PayPal being a big well-known company. And the more people who get exposed to crypto, the better we are, in my book at least. As it can only help with the adoption. And as PayPal does not have any "shitcoins" the odds of people having a bad experience with crypto through PayPal are much smaller. Also, they do not need to learn about setting up a crypto wallet this way, so that is also a big plus for easing people into it.
The bad, well I think there is nothing inherently bad about PayPal. They have had some controversies regarding who where or is using the site. As some right-wingers and other less desirable people have previously used the site. If it is the case still, I don't know. But it is not something that will, on its own, dictate whether I will use the site or not. But there is also the ever-looming threat of big money swooping in and simply taking over. But I do think there are bigger threats of this happening currently than PayPal. As an example just look at the companies currently applying for a Bitcoin ETF with the SEC in the US.
Regarding the future, I think that PayPal might even look at starting an exchange. And if we just take a look at their current user numbers they are sitting at 435 million active accounts as of 2023. If we compare that to Binance which is the largest crypto exchange we see that they have 128 million registered users in their end-of-the-year report for 2022. And even if we take away half of the PayPal accounts due to people having more than one account they are still almost sitting at double the the users. And they would not require much more onboarding either. So I think that it might be PayPals long-term goal with this to start up an exchange.
Will PayPal open its own crypto exchange?
The reason for this I think is simple. They will not be able to keep growing in their current market segment. That would mean they would need to find a new segment to grow within. And as they are currently in the payment section, crypto would be the natural move. And that would leave only two options, buying another company that already exists. There are currently not that many to choose from, and they are most likely valued in the billions. Making them, presumably, not that interesting target for acquisition. That leaves them the second option, make it themselves. And they certainly have the user base already. So why not simply add more financial payment options and services to what they are already offering? To me, it looks like one of those "like a glove" situations. So do not be surprised if you see them announcing this in the next year or two.
But I would really like to hear from you, have you tried PayPal´s crypto option? If so, how was it? Also if they end up starting an exchange would you use them for your crypto needs, also I would love to hear about why you would not if you don't want to use them.
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Picture provided by: https://newsroom.paypal-corp.com/media-resources