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PayPal Launches USD Stablecoin Amid Commerce Uncertainty

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Sarah Pereez
Sarah Pereezhttps://lahorelives.com
With almost 3 years of experience in journalism, Sarah Pereez has joined Lahore Lives as a Editor in 2023. She has previously worked as an Entertainment journalist, covering Hollywood & Bollywood news. At Lahore Lives, she tracks news updates, edit articles and write copies for science and technology.

Launching a stablecoin by PayPal that is tethered to the dollar allows for a more extensive examination of digital services’ role in modern commerce. According to reports, the company unveiled the stablecoin on Monday, August 7, to “contribute to the growth of digital payments,” in the words of CEO Dan Schulman.

To ensure stability and dependability, the issuance and stablecoins for PayPal USD will be 1:1, backed by liquid assets, specifically U.S. Treasurys. Users can send P2P payments using PayPal USD, transfer it between PayPal and compatible external wallets, and choose it as their payment method when making purchases.

The foundation for introducing stablecoins more broadly into the mainstream is found in those use cases. In general, stablecoins have been used for trading on cryptocurrency exchanges. Fiat is used to purchase a stablecoin, which is used to buy or trade cryptos (and the activity can occur across exchanges) without the hassle (and costs) of bank settlements.

The Prospect of Security?

According to the prevailing opinion, stablecoins are stable since they are pegged to U.S. dollars or, more specifically, a basket of U.S. assets.

However, recent months and years have shown that a few stablecoins have occasionally been able to “break the buck” and drop below that dollar peg.

Furthermore, the regulatory landscape for stablecoins needs to be clear. The U.S. Securities and Exchange Commission (SEC) gave Paxos a Wells Notice to stop producing the Binance USD stablecoin earlier this year. Investors then withdrew billions of dollars from the stablecoin as fresh issuance was halted due to that action.

There have been additional recent instances of stablecoin ventures in the private sector. With its blockchain-based JPM Coin, JPMorgan Chase has begun offering transactions for business clients in euros.

Environment in place

According to PayPal, because an ecosystem is already well-established, stablecoins may have a better chance of breaking into the market and being more than just an “onramp” into cryptocurrencies. According to our report of the company’s profits last week, there has been an increase in its use worldwide.

According to the statistics, there were 6.1 billion transactions, up 10% from 6.1 billion in the previous year, spread over 400 million active consumer accounts and 35 million active merchant accounts. The average number of transactions per active account increased by 12% to more than 54.

Venmo transactions increased by 8% to $67 billion, suggesting that P2P payments may be the origin of stablecoins. It should be noted that just a small section of the PayPal ecosystem is available at checkout because PayPal USD is only being launched in the United States, and Venmo is also only available there (it requires bank accounts). Source

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