Online payments firm PayPal launched a U.S. dollar stablecoin on Monday in a bid to boost the usage of cryptocurrencies for online payments and transfers. PayPal’s shares rose by 1% following the announcement.
Pegged to the U.S. dollar, this currency is defined as a stablecoin as it is designed to be protected from the volatilities that cryptocurrencies tend to experience, thereby making it easier to use for digital payments and as a store of value.
Backed by U.S. dollar deposits and short-term U.S Treasuries, PayPal USD is set to be issued by Paxos Trust Co, the company revealed. PayPal added that this currency will be gradually rolled out in the United States.
Last month, a U.S. congressional committee came close to passing a bill to establish a legal framework to govern stablecoins however this motion ultimately fell apart.
This isn’t the first occasion that a major player in payments has pushed the usage of digital currencies. In 2021, Visa announced that it would allow the usage of the cryptocurrency USD Coin for transactions on its payment network.