PayPal has introduced a new stablecoin cryptocurrency, PayPal USD, that is backed by US dollar deposits in an effort to facilitate transactions on its global payments platform. The digital currency is issued by Paxos Trust Company and pegged 1:1 to the US dollar, providing stability compared to more volatile cryptocurrencies like Bitcoin.
This launch comes during a turbulent time for the cryptocurrency industry, which is reeling from the spectacular implosion of FTX and ongoing legal troubles for major players. Stablecoins like PayPal USD aim to provide the benefits of crypto with less volatility by tying their value to fiat currencies.
According to PayPal CEO Dan Schulman, the shift toward digital currencies requires a stable instrument that can seamlessly connect to traditional money. PayPal USD is designed to streamline payments across PayPal’s platform and encourage further adoption of digital assets by major brands. The company hopes the stablecoin will lead to easier and more accessible payment options for users.
PayPal is planning to expand access to its new PayPal USD stablecoin to Venmo in the near future. Venmo is PayPal’s peer-to-peer payment app.
PayPal’s decision in 2020 to allow users to buy, sell and hold cryptocurrencies like Bitcoin helped drive significant growth in the crypto market. However, major scandals have since rocked the industry and made regulators more wary of cryptocurrencies as potential currencies.
US financial regulators argue cryptos should face strict securities rules. The launch of PayPal’s stablecoin comes just two weeks after OpenAI CEO Sam Altman unveiled Worldcoin, a crypto project requiring an iris scan for identity verification.
Worldcoin provides users a private digital ID – called a “World ID” – after an “Orb” device scans their unique iris pattern. This aims to address a major crypto challenge – its reliance on pseudonyms leaves it vulnerable to bots and scams.
Worldcoin also launched its Worldcoin token, distributing it to millions after initial tests. But due to US regulatory restrictions, the token is not yet available for trading there, despite significant enthusiasm for crypto.
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