PayPal USD has been launched by a US-based company in an effort to increase the use of digital currency payments.

    Even as US regulators tighten their monitoring of digital assets, PayPal is creating a stablecoin and becoming the first big financial company to dive deep into crypto payments.

    On Monday, the San Jose-based corporation announced the introduction of PayPal USD, a dollar-denominated stablecoin, as part of its continued growth into digital currency services.

    Despite an intense crackdown on unregulated activities throughout the cryptocurrency market by US officials, PayPal made its decision. Other businesses have reduced their crypto-related activity in the nation in response to strict governmental actions and investor concerns.

    Revolut, a fintech company, stopped operating in the US last week, citing “uncertainties around the crypto market in the US,” and became the newest entity to leave the nation.

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    A type of cryptocurrency known as a stablecoin often tracks the value of a significant currency, such the dollar, exactly. They are crucial in bridging the gap between traditional and cryptocurrency markets since traders can enter and exit deals without paying exorbitant fees or conduct international transfers without the need for multiple bank accounts by simply using the coins as cash.

    Since 2020, PayPal has provided trading in the two most well-known cryptocurrencies, bitcoin and ether.

    PayPal CEO Dan Schulman stated that the transition to digital currencies “requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar.”

    The development of a widely used crypto payments network has made little progress for traditional banking and tech companies. After encountering regulatory opposition, Meta abandoned its contentious Diem stablecoin project, which involved PayPal and credit card companies including Mastercard, last year.

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    For wider acceptance, digital asset payments “need to be on a mainstream app, which is what PayPal brings,” according to Gautam Chhugani, senior analyst of global digital assets at Bernstein. Up until now, digital asset payments had only been possible within crypto firms.

    He said that the stablecoin will let PayPal customers to send and receive money without paying exorbitant costs since “there’s no Mastercard, Visa fees and any other kind of third-party rail.”

    According to the firm, Paxos, which is overseen by the New York State Department of Financial Services, would issue PayPal USD, which would be redeemable one-to-one for US dollars.

    When one dubbed TerraUSD imploded in May of last year, the market for privately-issued stablecoins suffered a severe blow. This led to a decline in cryptocurrency values and the demise of numerous organizations that dealt in digital assets. US authorities have accused its creator, Do Kwon, of eight criminal offenses, including fraud.With its move, PayPal directly challenges Tether and Circle, the two companies that produce the most popular stablecoins.

    According to the business, the stablecoin’s reserves would be maintained in short-term Treasuries, US dollar deposits, and other assets.

    Customers of PayPal will be able to send money to friends and family, make online purchases, and move the stablecoin between their wallets and other external wallets. Additionally, they may exchange PayPal USD for the other digital currencies that the payments provider supports, such as bitcoin and ether.

    Read More: NaijaEcho

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