PayPal’s recent announcement of their stablecoin, PYUSD, has garnered praise from the crypto community, with many asserting its positive impact on the industry. Notably, the decision to launch it on the Ethereum blockchain further solidifies the network’s growing status as the currency layer of the Internet.
On August 7, PayPal, a leading global payments giant, unveiled its new stablecoin called PYUSD, pegged to the US dollar. While the response from the crypto community has largely been favorable, there remain some concerns about centralization.
Will Ethereum be the biggest benefit of PayPal’s stablecoin?
According to Ryan Sean Adams, PayPal’s decision to build on Ethereum solidifies the network’s position as the monetary and financial layer of the Internet. With approximately 430 million active accounts, the introduction of PayPal’s stablecoin on Ethereum has the potential to establish the network as the preferred currency layer of the Internet.
Adams emphasized that PayPal wouldn’t embark on this venture without regulatory safeguards, noting that the US Government appears to be supportive of stablecoins. He also suggested that PayPal might expand its stablecoin model globally, starting with centralized and highly regulated stablecoins, which aligns with the objectives of PYUSD. Additionally, there is a possibility that PayPal may extend its support to other decentralized assets in the future.
Furthermore, Bitcoin Foundation founder Charlie Shrem is expecting big gains for BTC, stating:
“Paypal launching a stablecoin will skyrocket#Bitcoin to at least $250,000 faster than it was supposed to, and ETH likely will 10x on a faster timetable. Very exciting.”
According to Tether CTO Paolo Ardoino, PayPal’s stablecoin (PYUSD) is not perceived as a threat to USDT since it is exclusively accessible to Americans. Ardoino stated to The Block that they do not anticipate any impact on USDT and expressed optimism about the positive implications for the overall crypto industry. He further mentioned that Tether’s focus lies in emerging markets and developing countries.
PayPal Critics Remain Vocal
The PayPal announcement received significant criticism, primarily focused on concerns about centralization and control.
Lark Davis, a prominent Crypto YouTuber, shared his thoughts on the issuer of PayPal’s stablecoin, Paxos. Notably, Paxos previously faced regulatory scrutiny for producing Binance USD.
“Sooo…. the new Paypal USD stablecoin is issued by Paxos. Remember when BUSD got ordered to stop issuing its coins? PYUSD is literally issued by the same company! This shit is crazy.”
Crypto influencer Layah Heilpern advised caution:
“I absolutely would not touch this and would advise you to do the same. This is how they discreetly bring about a CBDC. Money big tech can turn on and off if they don’t like your opinion.”
The smart contracts underlying PYUSD contain a hidden feature that allows PayPal to freeze or reverse transactions. Additionally, PayPal has a track record of frequently freezing user accounts and funds, imposing high fees, and implementing Know Your Customer (KYC) requirements similar to those of banks.