What is PayPal USD (PYUSD)?

PayPal USD is a stablecoin meant to be worth one US dollar. PayPal launched it, and a regulated company called Paxos issues it. Every token is meant to be backed by dollars and similar safe assets.

Where it came from

PayPal announced PayPal USD on 7 August 2023 and began offering it to customers in the US.

How it works

PayPal USD is the company-issued kind of stablecoin described in Lesson 10, like USDT and USDC.

• Issuer. Paxos Trust Company issues the tokens. It is a limited-purpose trust company supervised by the New York State Department of Financial Services.
• Backing. Reserves are held in US dollar deposits, short-term US Treasury securities and similar cash equivalents.
• Redemption. Holders can exchange PayPal USD for US dollars one for one.
• Reports. Paxos said it would publish a monthly report on what the reserves hold, starting in September 2023.
• Blockchain. It launched as a token on Ethereum (Lesson 9).

What people use it for

In the US, PayPal customers can buy and sell PayPal USD at $1, send it to other people, pay for purchases with it, swap it for other cryptocurrencies in PayPal and move it to outside wallets. PayPal said it would add it to Venmo too.

Risks to know

• You trust the issuer. Like all company-issued stablecoins, PayPal USD is only as good as the reserves and the company holding them.
• Tokens can be frozen. The token's contract lets the issuer freeze balances and remove funds from them.
• Not a bank deposit. Stablecoins are not covered by deposit insurance. Lesson 10 explains the difference.
• Smaller than its rivals. Fewer exchanges and apps support it than USDT or USDC.

Learn more

Lesson 10 covers stablecoins, and the Tether and USDC guides describe the two largest.