- PayPal added crypto features to business accounts after increasing user demand.
- In 2023, PayPal announced its stablecoin, the PayPal USD ($PYUSD), integrated on Solana in April 2024.
- A dollarized stablecoin would be a smaller and more appealing transition to blockchain finance than CBDCs or Bitcoin-backed stablecoins.
- The stablecoin thesis has several strong supporters, including Coinbase Asset Management CEO Eric Peters.
One of the biggest obstacles to global crypto adoption is a lack of support from traditional and digital finance. But PayPal may have just flipped the narrative on its head.
It added official crypto support for its business accounts. Merchants can now buy, hold, and sell crypto. Not just in New York.
Business account users can also send and receive cryptocurrencies to and from external addresses. This significantly increases the number of use cases and adds excellent flexibility to crypto transactions on the platform.
More importantly, this decision continues PayPal’s crypto roadmap (the $PYUSD stablecoin announced in 2023 and integrated with Solana).
Let’s see where PayPal plans to take this and whether a dollarized stablecoin is waiting for us.
Crypto-Enabled PayPal Business Accounts Are Finally Here
Jose Fernandez da Ponte (PayPal’s senior VP of blockchain) said the new crypto features have been in the making for a long time as demand has kept increasing.
Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers. We’re excited to meet that demand by delivering this new offering, empowering them to engage with digital currencies effortlessly.Jose Fernandez da Ponte, Senior VP of Blockchain at PayPal
By doing this, PayPal brings crypto to millions of US merchants, potentially increasing adoption rates by a large margin. This could be a significant step forward for crypto, continuing the institutional adoption efforts brought through $BTC and $ETH ETFs.
But this isn’t PayPal’s first foray into crypto.
PayPal USD Integrated on Solana – Dollarized Stablecoin Next?
In 2020, PayPal allowed users to buy, hold, and sell crypto on its platform and Venmo. In 2023, it announced the launch of PayPal USD ($PYUSD), a USD stablecoin. And one year later, in April 2024, Xoom enabled $PYUSD payments with no transaction fees between friends and family.
Why?
Because crypto is a giant industry, and traditional finance can’t ignore it anymore. And because the global stablecoin market cap is $173B, with an $81B trading volume in the last 24 hours.
In fact, PayPal USD is ranked 99th on CoinMarketCap, with a $710M market cap. That’s quite the ascension in one year.
PayPal then integrated $PYUSD into Solana, giving users a multi-chain experience for extra control and flexibility. The progress is impressive, especially for a company that only recently started its crypto journey.
If PayPal continues down this path, could we see a fully USD-backed stablecoin in the future? Perhaps the US should develop a public-private partnership to dollarize crypto. This thesis already has several solid supporters, including Eric Peters, CEO of Coinbase Asset Management.
If we compare a CBDC or a $BTC-backed currency with a dollarized stablecoin, the latter seems like a less intrusive transition and likelier to attract quick adoption (and trust).
Looking Ahead – Is the Stablecoin Thesis Viable?
There’s no doubt that stablecoins are a safer alternative to CBDCs while harnessing blockchain technology to its full potential.
A dollarized stablecoin would also consolidate the US currency and, most importantly – add a massive use case on top of the existing financial ecosystem. This would reduce adoption friction.
The USD remains the most used currency in the world, so the stablecoin thesis not only holds water but would be a logical next step.
When will this happen? That’s unclear, but PayPal’s efforts will go a long way to convincing the right people about the merits of this move.
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Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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