On September 25, payments giant PayPal announced that PayPal Business accounts can now buy, sell, and trade cryptocurrencies directly from their PayPal accounts.
The new feature is available to all US sellers across the United States, excluding New York.
Jose Fernandez da Ponte, PayPal’s SVP of Blockchain, Cryptocurrency and Digital Currency, said of the new feature:
“Business owners are increasingly expressing a desire for the same cryptocurrency functionality that consumers get. We’re excited to meet that demand with this new service, making it easier for them to engage with digital currencies.”
Merchants using this service can also withdraw their digital assets to external wallets or cold storage for added security.
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PayPal Enters the Stablecoin Game
In August 2023, PayPal launched the PYUSD stablecoin. The PayPal-United States Dollar (PYUSD) stablecoin was issued by Paxos and is fully overcollateralized, meaning that the stablecoin is backed by US dollar deposits and short-term cash equivalents. PYUSD is fully redeemable at a 1:1 ratio with the US dollar.
The payment company later expanded PYUSD to the Solana network, noting that Solana (SOL) has significantly lower transaction costs. PayPal hopes that these lower costs will encourage the use of PYUSD for small purchases, such as coffee or lunch at a restaurant.
In general, smaller purchases are prohibited on lower throughput blockchains with lower fees and slower confirmation times. To put this into perspective, transactions on Solana can be as low as $0.0025, while transactions on Ethereum can be in the double digits, especially during times of network congestion.
As a bonus, PayPal announced that Solana’s PYUSD will feature “confidential transactions,” a way to hide payment amounts from the public but still allow the transactions themselves to be viewed for compliance purposes.
PYUSD recently grew to a market cap of $1 billion, but it still lags behind Tether (USDT) and Circle’s dollar-pegged stablecoin (USDC). As of August 2024, Tether boasted a whopping $118 billion market cap, while Circle had a market cap of $35 billion.
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