PayPal Holdings Inc. plans to offer rewards to its users for their holdings of its stablecoin.
The mentioned company is currently seeking to drive the scaling of leveraging of the specified digital token in a market where there is increasing competition.
Under the program, which is expected to be launched in the summer of the current year, PayPal and Venmo customers in the United States will be able to earn 3.7% annually on PayPal USD (PYUSD) holdings in their wallets. The company published the relevant information on Wednesday, April 23. Users will receive rewards in PYUSD, which they can exchange for fiat currency, send to other customers, make international transfers, or utilize for purchases with PayPal Checkout. This information was also published by the company.
The rewards, which will accrue daily and will be paid monthly, are aimed at helping incentivize the use of stablecoin as a form of payment in PayPal’s network. Jose Fernandez da Ponte, the company’s senior vice president and general manager of blockchain, crypto, and digital currencies, told about this during a conversation with media representatives.
Stablecoins are digital tokens that are designed to maintain constant value against an asset such as the dollar or the euro. Recently, there has been an increase in the popularity of the mentioned tokens. It is worth noting that consumers are also showing an increasing interest in other cryptocurrencies, such as Bitcoin. The low level of volatility has made the mentioned digital assets popular among crypto traders who want to move in and out of positions or transfer funds between platforms. Also, these assets are increasingly seen as a promising way to facilitate faster and cheaper virtual payments and cross-border money transfers.
PayPal was the largest established financial company to launch a stablecoin when it introduced PYUSD two years ago. At the same time, with a total market value of about $873 million, the token has not yet had a significant impact on the market, where Tether’s $145 billion USDT currently dominates.
Data from CoinGecko indicates that only six stablecoins have a market value of more than $1 billion.
Jose Fernandez da Ponte stated that PYUSD, like its peers, was primarily used for cryptocurrency-related transactions. According to him, PayPal is currently considering stablecoins as a building for the next generation of payment rails, but the company is aware that this will take time. He also noted that the firm is halfway in a 10-year journey.
In the current year, PayPal intends to integrate its stablecoin into more of its products. By implementing this plan, the company aims to make payments cheaper and faster for millions of merchants and consumers on its network.
PayPal chief executive officer Alex Chriss stated that the firm is currently thinking a lot about how it can change the expense profile of the payments landscape using stablecoins.
Since the launch of PYUSD, several other major financial companies have taken steps in this space. Against this background, there was a ramping up of competition for the San Jose, California-based firm. The media published information according to which Robinhood Markets Inc. and Revolut Ltd., one of the most successful fintech companies, are currently among brands considering the possibility of launching stablecoins.
At the same time, the payment firm Stripe acquired Bridge, a stablecoin startup. This deal was implemented in the current year. Moreover, investment manager Fidelity is testing a stablecoin.
Other established issuers have focused on ways to grow the use of their tokens. This week, Circle Internet Group Inc. announced that it is launching a payment network designed to allow financial institutions and technology companies to settle cross-border transactions in stablecoins.
Stablecoins have emerged as one of the most lucrative corners of the crypto market, as the reserves backing the token are normally held in US Treasuries or other cash equivalents that have benefited from higher interest rates. Jose Fernandez da Ponte stated that PYUSD’s rewards will not be tied to the rates of the United States Federal Reserve System and will not be solely funded through the interest that the company generates on its reserves. The stablecoin is issued by Paxos Trust Co.
Other companies offering rewards on stablecoin balances include cryptocurrency exchange Coinbase, which allows users to earn rewards on their holdings of Circle’s USDC.
As we have reported earlier, PayPal and Will Ferrell to Promote Updated Pay-Later Program.
