PayPal’s PYUSD stablecoin makes its debut on Venmo for selected users, with a full rollout planned in the coming weeks.
Expanding Access to PYUSD
The peer-to-peer mobile payments giant is extending the reach of its PayPal USD stablecoin (PYUSD) by making it available to select users on Venmo. Effective September 20, 2023, this expansion will provide greater access to PYUSD within the growing digital payments ecosystem.
The move will empower Venmo users to acquire and send PYUSD across platforms, including PayPal, Venmo, and other compatible external wallets. This strategic initiative aims to bolster the utilization of PYUSD and tap into the thriving cryptocurrency market.
PYUSD is built on the Ethereum blockchain and is backed by U.S. dollar deposits and other liquid assets. This includes short-term treasuries. Launched by PayPal and issued by Paxos Trust in August. PYUSD is already available on major crypto exchanges like Kraken, Coinbase, and Crypto.com.
Moreover, PYUSD has received regulatory approval from the New York State Department of Financial Services (NYDFS), making it more accessible to virtual currency entities licensed in New York. This expansion marks a milestone, allowing users to transfer PYUSD between PayPal and Venmo at no additional cost except for blockchain network fees.
Challenges in Achieving Widespread Adoption
Despite its potential, PYUSD has faced challenges in gaining widespread adoption. A transparency report from Paxos reveals that PYUSD had total net assets valued at $45.3 million as of August 31, 2023. However, this stablecoin has yet to achieve substantial user engagement.
The report highlights that only around $1.5 million is backed by cash deposits, with the majority, $43.8 million, collateralized through U.S. Treasury reverse repurchase agreements. While PYUSD has managed to maintain its peg to the U.S. dollar, it has experienced limited growth compared to the leading stablecoin Tether (USDT). This boasts a market capitalization exceeding $83 billion.
In terms of market capitalization, PYUSD currently ranks 19th among stablecoins. This slower adoption can be attributed to heightened competition in the stablecoin space and potential regulatory challenges.
Final Thoughts
PayPal’s decision to introduce PYUSD to Venmo users represents a significant step towards broader cryptocurrency adoption within the company’s ecosystem. This move aims to facilitate seamless cross-platform transactions and leverage the growing demand for stablecoins in the digital payments landscape.
However, PYUSD’s slower adoption than its counterparts underscores the challenges and competition that stablecoins face in the cryptocurrency market. Moreover, whether PYUSD can gain a more substantial foothold among users and thrive in the competitive stablecoin space remains to be seen.