The news: PayPal confirmed that it's exploring a stablecoin backed by the US dollar after developer Steve Moser discovered code and images referencing “PayPal Coin” inside the PayPal iPhone app, per Bloomberg.
Key context: Stablecoins are generally less volatile than traditional cryptocurrencies like Bitcoin or Ethereum. They’re pegged to the value of an underlying currency or commodity, like the US dollar or gold—making them more viable for payments.
One drawback for stablecoins is the lack of adoption and acceptance as payments. But a PayPal stablecoin might be able to overcome this hurdle thanks to the brand’s vast merchant and customer bases.
Why it matters: A proprietary stablecoin would be the cherry on top of PayPal’s crypto-related efforts.
The big takeaway: A proprietary stablecoin could help boost PayPal’s revenues, but it would need to adapt to the shifting regulatory landscape: Although no official rules have been created, research and efforts to build a regulatory framework are underway in the US. If the stablecoin does come to fruition, working with regulators can help ensure appropriate security safeguards are in place.
Related content: Check out the Use Cases section of our “Blockchain in Payments” report to learn more about benefits, risks, and considerations for stablecoins, central bank digital currencies, and traditional cryptocurrencies.