The company says it will be backed with US dollars and will work with regulators.
the main points
- On Friday, January 7, PayPal publicly confirmed its intention to launch its own digital stablecoin.
- The company also confirmed that PayPal Coin will be added to the US dollar.
- No further details have been provided by PayPal regarding follow-up regarding the likely timing of the launch or whether it will be available on centralized exchanges such as Coinbase or Gemini.
PayPal Holdings Inc. Publicly its intention to launch its own stable digital currency as it was first mentioned before Bloomberg. In the article, the global payment giant announced that it is working on a private stablecoin, and that its cryptocurrency will be pegged to the US dollar. There was no mention of a rollout timeline or target launch date. PayPal confirmed the announcement, in response to our inquiry for comment. “We are exploring a stablecoin; if and when we seek going forward, we will of course work closely with the relevant regulators,” according to an official PayPal statement emailed to The Ascent by The Motley Fool.
What exactly is a stablecoin?
Stablecoins are a class of blockchain-based electronic money that is tied to non-blockchain physical assets such as government bonds, reserve currencies, or gold. The thinking is that pegging a stablecoin to a proven resource, such as the US dollar, mitigates the extreme price swings that typically occur within the crypto space.
PayPal Expands Its Crypto Offerings
PayPal’s intentions for a stablecoin surfaced when someone shared with the media the “PayPal Coin” logo that appeared on the company’s iPhone app as part of an exploratory test of its token. The company already offers retail customers the opportunity to buy and sell a handful of cryptocurrencies, Bitcoin, Ethereum, Litecoin, and Bitcoin Cash specifically — for less than $1 to start.
PayPal also provides a range of crypto solutions for small businesses. According to their website, nearly 30 million merchants have small to medium business accounts with PayPal. Merchants use their own accounts to accept customer payments online, in person, or on the go. PayPal also enables owners to take out loans, automate bookkeeping, and create invoices.
Other tech players tested cryptocurrencies
PayPal is the latest technology company to explore its cryptocurrency. We know Facebook/Meta’s stalled efforts with Libra/Diem, but not many people know that Amazon has digital aspirations too. The world’s largest online retailer currently owns its own unique digital currency that has been around for years. It’s called AmazonCoins. While the tokens can currently only be used for Amazon-hosted games and apps, they do exist and have momentum within the Amazon ecosystem.
Would PayPal coin be a good investment?
At this point, it’s too early to tell if regular investors should buy PayPal coin if that happens, because we don’t have enough details. However, PayPal is the second most trusted brand globally, according to the annual Morning Consult ranking, outperforming all other payment providers including Visa and Mastercard. It also has the payment processing infrastructure, global scale, and existing retail relationships – which makes sense for PayPal to push further towards crypto. One unknown key that the company declined to address when asked, was whether PayPal Coin would be available on centralized crypto exchanges such as Coinbase, Gemini or Kraken.
Most of the stablecoins are used as a place to accumulate profits and provide liquidity to cryptocurrency investors. So, while that money lags in an account, the custodian of the digital wallet – in this case it would be PayPal – will often offer interest rates in the high or low double digit range. If PayPal offers these types of returns, it’s definitely worth considering for anyone with a crypto curiosity.
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