In a pivotal moment, the digital payment titan PayPal announced the expansion of its partnership with crypto exchange Coinbase to boost stablecoin adoption, distribution, and utilization. This joint effort will provide value to consumers, enterprises, and institutions as they continue to utilize PayPal USD (PYUSD), the company’s stablecoin.
Notably, Coinbase has already planned to remove fees for purchasing PYUSD to align with the same goal of stablecoin adoption, as mentioned above.
PayPal’s 3.7% yield program
On April 23, PayPal announced that it will offer a 3.7% annual yield on balances held in its PYUSD stablecoin. The sole purpose of the team behind the yield program is to prevent the stablecoin from remaining untouched and avoid limiting its use case to crypto transactions only. That being said, the digital payment platform aims to extend the usage of coin to broader transactions. The company launched the stablecoin in August 2023 through Paxos Trust Company, a fintech institution.
A press release issued by PayPal on April 24 read that the latest collaboration would give millions of Coinbase customers direct access to PYUSD, enabling thousands of institutions already using crypto to gain increased utility with PYUSD. The stablecoin users will be able to swap PYUSD for fiat currency and send it to other users. The daily rewards generated will be transferred to the user’s account every month.
Besides the payment-related activities, both platforms have come to a consensus to explore new use cases for PYUSD in decentralized finance (DeFi) and on-chain platforms. Following the announcement, Alex Chriss, President and CEO of PayPal, remarked:
“For years, we’ve worked with Coinbase to enable a best-in-class integration to provide a simple, familiar way for PayPal users to fund crypto purchases on Coinbase. Our objectives aligned further as we deployed PYUSD in combination with our payments expertise, enabling greater commerce applications.”
The Coinbase team took to X, underscoring their interest in exploring new on-chain use cases of the stablecoin. The exchange confirmed that it will ensure PYUSD’s utility, where users can convert PYUSD directly into USD at a 1:1 ratio, meaning 1 PYUSD = 1 USD.
At the time of reporting, PYUSD showed a market cap of $888.35 million and is the sixth-largest stablecoin by market capitalization.
Experts’ take on stablecoin adoption
As the dollar-backed payment stablecoin adoption race is escalating in the US, aligned with the country’s mission to make the dollar a dominant global reserve currency, more institutions are expected to join this movement. Earlier in March, the US Senate Banking Committee issued the GENIUS Act, a regulatory framework for the issuance and regulation of payment stablecoins in the US. This top-priority act, once implemented, will likely shed more light on the greater adoption of the coins.
However, experts have mixed reactions to the act. Some have raised concerns about the potential risk to monetary policy, while others have praised the act as a way to increase stablecoin adoption and reduce legal uncertainty. Meanwhile, some commentators have said that the GENIUS Act will bring excessive regulatory burdens on some stablecoin issuers.
