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PayPal’s Stablecoin Opens Door For Crypto Adoption In Traditional Finance
Earlier this month, PayPal, the global payment processing titan, revealed PayPal USD (PYUSD), its own stablecoin. We covered this announcement here and now, more details are being revealed.
Pegged to the US dollar and built on Ethereum’s technology (via Ethereum’s ERC-20 token, where many alternative cryptocurrencies are generated atop), PYUSD is set to become a vital part of PayPal’s payment infrastructure.
This move comes after PayPal allowed its US and UK users to buy, sell, and store cryptocurrencies on their accounts.
The primary use of PYUSD will be for money transfers and as a payment method for PayPal’s vast network of merchants.
The coin will also be available on Venmo, another popular payment app owned by PayPal, and transferable to crypto wallets like Coinbase Wallet and MetaMask that support PYUSD.
Currently, the stablecoin market, worth $125 billion, is dominated by Tether, with a market cap of $86.5 billion, followed by USD Coin (USDC) with $26 billion.
PayPal’s entry into this market is significant as it’s the first major payment processor to issue a stablecoin.
However, PayPal’s move has sparked debate. Some criticize PYUSD for its centralized nature, which allows for freezing addresses and pausing transfers.
But others view this centralization as necessary for regulatory compliance and to prevent potential fraud.
PayPal’s entry into the stablecoin market could also influence cryptocurrency regulations in the US.
As a significant player, PayPal’s involvement might push for more precise and updated regulations in the crypto space.
With the current regulatory scrutiny on stablecoin issuers in the US, experts believe PayPal’s venture could change the tide.
PayPal’s PYUSD is a significant step in bridging the gap between traditional finance and the crypto world.
With over 400 million customers globally, PayPal’s entry into the stablecoin market could drive the adoption and acceptance of cryptocurrency in mainstream finance. Read more here.
How Entrants Like PayPal Are Aiming To Stand Out And Stay Safe
One of the key takeaways from PayPal’s expansion into the stablecoin market is the importance of offering a unique value proposition.
PayPal’s PYUSD enables transfers between its platform, Venmo, and interoperability with other PYUSD-supporting wallets.
Similarly, Zucoins could reinforce its unique selling point—its robust Splitchain network that ensures swift, safer transactions with no layer-1 transfer fees.
By continuously enhancing this user-friendly, efficient network, Zucoins can carve out its own niche in the crowded cryptocurrency space.
The controversy surrounding PYUSD’s centralized structure is another interesting point. Critics focused on PayPal’s ability to pause transfers, freeze addresses, and increase the coin’s total supply.
On the other hand, the Splitchain network behind Zucoins is decentralized, with transaction data negotiated autonomously by the transacting peers.
This offers a significant contrast and potential advantage over PYUSD, highlighting users’ increased freedom and control over their transactions.
Zucoins and Splitchain can leverage this trend by pitching the unique benefits of their offering to potential partners in the traditional finance sector.
By demonstrating how their innovative technology can enhance the financial services offered by these companies, they could drive wider adoption of their cryptocurrency and enhance their position in the growing market.
The launch of PYUSD has also sparked discussions about the need for clearer crypto regulations in the U.S.
Although Zucoins and Splitchain may not currently face the same regulatory challenges as PYUSD due to their non-U.S. origins and non-stablecoin focus, they can take a proactive approach.
They could engage with regulators in their home markets, advocating for clear, supportive crypto regulations that would promote innovation and growth in the sector.
This would also prepare them for potential future expansion into more heavily regulated markets.
PayPal’s move is seen as testimony to mainstream financial giants’ growing interest in the crypto ecosystem.
It also helps counter the ongoing uncertainty and long-time shadow cast by the controversial stablecoin Tether (USDT), which has likely limited the deeper involvement of institutions and prominent brands in this area.
PayPal’s offering could be a safer solution for those wanting to bridge the gap between existing local fiat currencies (USD, GBP, AUD, etc), and cryptocurrencies, using stablecoins as an in-between exchange token.
It’s worth noting many crypto exchanges already offer their own stablecoins as an in-between, however often their liquidity reports are questionable and an unreliable means of determining how safe a private crypto exchange’s reserves are.
Ideally, all major crypto exchanges or stablecoins would follow the path of becoming public companies, following the path of Coinbase and PayPal, respectively, where stricter and regular auditing processes are required.
Doing so would help create a more reliable and transparent currency-swap base for the industry.
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All the best,
Peter & Rob
MyZucoins