LAGOS, Nigeria (VOICE OF NAIJA)-PayPal, a global leader in payments, announced on Monday that it has introduced a stablecoin pegged to the US dollar, making it the first significant financial technology company to accept digital currencies for transfers and payments.
Stablecoins have been available for years, but they haven’t yet made a significant impact on the standard consumer payment environment.
Stablecoins are crypto tokens whose monetary value is tethered to a stable asset to safeguard them from extreme volatility.
The move made by PayPal, which increased its shares by 2.5 percent in afternoon trade, is a vote of confidence in the struggling sector, which has struggled in recent months with regulatory challenges that were made worse by a succession of high-profile failures.
The financial industry’s politicians and regulators have vehemently opposed previous attempts by large mainstream corporations to introduce stablecoins.
After regulators expressed concerns that Meta’s and later Facebook’s 2019 plans to introduce the stablecoin Libra may disturb global financial stability, the plans were scrapped.
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Since then, regulations governing stablecoins have been established by a number of significant economies, including Britain and the European Union. June 2024 will mark the implementation of EU policies.
The US House Financial Services Committee also passed a measure last month to create a federal regulatory framework for stablecoins, with a particular emphasis on the guidelines for the registration and licensing procedures for stablecoin issuers.
PayPal’s stablecoin, known as PayPal USD, will be released by Paxos Trust and is backed by short-term US Treasury securities and US dollar deposits. American PayPal users will progressively be allowed to access it.
PayPal’s brand recognition makes the stablecoin debut noteworthy, according to Argus Research Corp analyst Stephen Biggar, but the corporation has already been linked to cryptocurrencies, so it’s not surprising.
Additionally, Visa stated that starting in 2021, cryptocurrencies would be accepted as a form of payment on its payment network.