PayPal has added a new cryptocurrency to its roster: PayPal USD (PYUSD).
On Monday, the online payments service became the first major U.S. financial company to launch its own U.S. dollar-backed stablecoin.
Unlike other cryptocurrencies, which derive their value based on how much crypto traders are willing to pay for them at the moment, stablecoins are typically backed by a physical asset, such as commodities like gold or fiat currencies like the U.S. dollar, which help the stablecoin maintain a relatively consistent price.
PayPal USD is “100% backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents,” according to a Monday press release. Additionally, PayPal’s stablecoin is redeemable 1:1 for U.S. dollars, which means one PayPal USD can be redeemed for one U.S. dollar and vice versa.
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