PayPal's da Ponte Promotes Broad Access to Stablecoins

• PayPal Plans to Issue its Own Stablecoin
• PayPal Arrives in the Stablecoin Market
• The Man Behind the Move
• PayPal's Risk in the Regulatory Landscape
• The Future of PYUSD
• Why Ethereum?

PayPal Plans to Issue its Own Stablecoin

This August, PayPal revealed plans to launch its own dollar-backed stablecoin, a development that may serve as a defining moment for the era. The popularity of stablecoins in the cryptocurrency market cannot be ignored, boasting a market cap of approximately $140 billion and thousands of users daily. PayPal, with its vast expertise, expansive network and solid regulatory reputation, is uniquely positioned to elevate these products.

PayPal Arrives in the Stablecoin Market

Large entities already issue stablecoins pegged to the U.S. dollar, including Tether$1.000 -0.12%'s USDT and Circle's USDC, which dominate the market. However, PayPal holds a distinct presence in this field due to its size and credibility as an established fintech powerhouse. Since its foundation in 1998, the company has played a crucial role in shaping e-commerce and has been instrumental in the success of companies like eBay.

PayPal's decision to venture into stablecoins this year was timed well, coming at a point when the industry faced numerous challenges including slipping asset prices, regulatory scrutiny and the consequences from various crises in the crypto world. With 450 million customers across 200 countries, and vast experience in the payment industry, PayPal aims to mainstream crypto technology for the masses through its Ethereum$2,315 -2.42%-based stablecoin (PYUSD).

The Man Behind the Move

The individual spearheading this initiative, Jose Fernandez da Ponte, shed light on why PayPal decided to shift into this domain and how he envisions stablecoins altering the payments landscape in a recent interview. Da Ponte believes the benefits of stablecoins, such as cost-effectiveness, programmability, and speed, outweigh traditional banking methods. He emphasized that stablecoins also carry the potential to do more than just transferring money, thanks to the integration of smart contracts that can settle business transactions along with payments.

PayPal's Risk in the Regulatory Landscape

Despite the potential of regulatory backlash in light of past crypto scandals, PayPal remains undeterred. It anticipates a clearer regulatory environment by 2024 and expects companies with robust compliance measures and fully audited reserves to outperform others over time. Da Ponte believes that having a robust regulatory structure, transparent reserves, and strong network effects are essential to succeed in the long run.

The Future of PYUSD

As for the future of PayPal's stablecoin, Da Ponte predicts a tenfold growth in the asset size of stablecoins over the next five years. He views stablecoins as a game-changer, enabling mass transmission of value over the internet without intermediaries. This has significant implications for regions where infrastructure is lacking, and where costs and settlement times are high.

Why Ethereum?

PayPal opted for Ethereum since it's already being used by other USD stablecoins like USDC and USDT. Besides having a healthy community of developers, regulators are comfortable monitoring flows on this network. While Ethereum was chosen initially, Da Ponte sees potential in other blockchains as well, with scale and throughput being the decisive factors in their selection.

Ultimately, PayPal is committed to the ethos of public blockchain infrastructure, believing that there shouldn't be an exclusive PayPal protocol. This dedication stays true to the open-source nature of cryptocurrencies and the democratic ideals of the blockchain.

Edited by Jonathan Stoker