PayPal confirmed Jan. 8 that it was “exploring a stablecoin” that could be called PayPal Coin after a developer found evidence of such a stablecoin in the source code of the company’s iPhone app.
PayPal’s senior vice president of cryptocurrencies and digital currencies, José Fernández da Ponte, He said at the time that if the company plans to move forward with the stablecoin, it will do so in close cooperation with relevant regulators, an approach that could help the fintech avoid the wrath of US senators, the Metas Diem cryptocurrency project denounced.
The company has clarified that the source code found in its iPhone app was developed in an internal hackathon. When PayPal was contacted by Cointelegraph for more information, a spokesperson confirmed the earlier report but offered no additional comment.
The potential impact of a PayPal stablecoin on payments in general and the cryptocurrency industry is difficult to gauge, and while some experts see the company’s move as extremely positive for the space, others believe the stablecoin would be more of the same.
Could PayPal Coin Normalize Crypto Payments?
It is clear that a traditional financial company entering the cryptocurrency space and launching its own stablecoin is different from a homegrown cryptocurrency company launching a stablecoin. Traditional financial companies cater to users who are not necessarily concerned with cryptocurrency wallets or the volatility in this space.
PayPal itself has over 350 million active users and already allows users in the US and UK to buy, sell and hold bitcoin (BTC), ether (ETH), bitcoin cash (BCH) and litecoin (LTC) while making payments Assets are enabled in these cryptocurrencies. While it is unclear how many PayPal users paid with cryptocurrencies, it is known that stablecoins are primarily a tool used to trade and seize opportunities in the field of decentralized finance.
PayPal continues to advance the cryptocurrency industry by launching a stablecoin and may see other traditional banking and payment companies further exploring blockchain technology.said Marwan Forzley, CEO of online payment platform Veem. Forzley told Cointelegraph that stablecoins are “likely to become part of the global payments system” as moving money in a secure, up-and-down environment with various apps is “a major need for small businesses” and corporations. Forzley added:
“PayPal Coin could spark general interest in shared payments. Consumers and small businesses alike are looking for a secure and reliable alternative to traditional currencies and payment networks.”
Max Galka, CEO of blockchain search engine Elementus, appeared to agree with Forzley’s assessment, noting that with globally recognized platforms like PayPal supporting cryptocurrencies, stablecoins are immediately placed in a “trustworthy realm” for a large segment of the population.”
for Galka, PayPal’s launch of its own stablecoin “would definitely open up crypto to more people” who “didn’t have the inclination to really explore this niche market.”. Galka told Cointelegraph:
â€œRight now, there arenâ€™t many well-established, trusted organizations in this space where trust is such a critical component. PayPal would be one of the first major financial companies to adopt cryptocurrencies.”
He said it’s a “very natural solution for PayPal to develop a stablecoin” as the move puts the company “directly on the map as a cryptocurrency company,” which could boost its other cryptocurrency offerings.while the trust people have in the company could result in PayPal Coin “serving many additional purposes than traditional stablecoins can offer by using this.” [confianza] like your payment tracks.”
Arbel Arif, founder and CEO of cryptocurrency marketplace Shopping.io, told Cointelegraph that he welcomes PayPal’s entry into the cryptocurrency space, adding that “big players enhancing cryptocurrency transactions in e-commerce are showing us another step into the… bring new era of trade closer act.
Speaking to Cointelegraph, Tim Frost, founder and CEO of wealth management platform Yield App, said that cryptocurrency payments are “making their way into the mainstream” as “a number of companies are now allowing digital asset owners to pay with digital currencies using a standard Visa or Mastercard “. .
For Frost, it’s unclear whether PayPal’s launch of its own stablecoin would spur the transition to a world more focused on cryptocurrency payments, although he believes it has the potential.
However, not everyone agreed that PayPal Coin could be revolutionary. Speaking to Cointelegraph, Rytis Bieliauskas, CTO of cryptocurrency payment gateway CoinGate, said he doesn’t see how a PayPal stablecoin is “fundamentally different from what PayPal is already doing” provided it is “centrally controlled” and its value is managed by the company guaranteed . .
Bielauskas added that it is “interesting to see PayPal looking to use crypto as a positive public relations move,” which he says suggests that the public is now viewing crypto as a positive rather than a negative.
Addressing regulatory challenges
While PayPal clarified that it would work with relevant regulators on its stablecoin as the project progressed, it will still face regulatory challenges given the scale of its business.
So says Eli Taranto, director of business development at EQIBank, a licensed digital bank that works with corporations and high net worth individuals. Taranto told Cointelegraph that PayPal’s geographic footprint exposes it to “global regulatory issues” related to cryptocurrencies, which “will be quite interesting and a necessary challenge.”
for Taranto, PayPal’s revenue from transactions means it “needs to connect as many tokens and chains as possible while building faster, better, and fully automated cross-chain instruments.” He added:
“This could eventually serve as a catalyst for massive cryptocurrency adoption and give the cryptocurrency processing industry a boost as venture capital will flow into this relatively new sector.”
Taranto said that if PayPal manages to placate regulators, it will affect other institutions, who “will see it as a sign that a path to global regulatory compliance has been paved.”
Stablecoin issuers have not only been scrutinized by regulators, as they are often pressured by the cryptocurrency community to be as transparent as possible about how they hedge their stablecoins. Launching a stablecoin will put PayPal under closer scrutiny, so it’s worth asking: what’s in it for them?
How PayPal benefits from a stablecoin
Ultimately, PayPal’s issuance of its own stablecoin is an improvement on the bottom line. Caleb Silver, editor-in-chief of financial information portal Investopedia, noted that transaction-related spend cost PayPal $2.7 billion in the third quarter of 2021, based on its most recent quarterly filing.
By using a powerful transaction blockchain like Solana, PayPal could save a significant amount in transaction-related fees. The company does not currently allow users to buy or sell Solana (SOL) on its platform, and it is unclear which blockchain it would deploy its stablecoin on.
Speaking to Cointelegraph, Jerald David, president of digital asset investment firm Arca, said that PayPal is “in a unique position to launch cryptocurrencies because it has a captive customer audience and because that potential customer audience product offering is an extension of its existing core business”. David added:
“By combining the efficiencies of blockchain technology with their existing business model, they can help create and foster trust in the digital asset industry among individuals and small businesses.”
For the President of Arca, it is likely that people who will one day adopt digital assets will do so through a third party who has earned their trust, such as e.g. PayPal.
Very little is known about PayPal’s stablecoin plans. Steve Moser, the developer who found the PayPal coin code in the company’s iPhone app, later revealed that PayPal had in-app references to stablecoins pegged to the pound and euro, suggesting that PayPal would release multiple stablecoins pegged to various fiat currencies.
What if PayPal Coin is something different than PayPal’s USD Stablecoin? What if PayPal also worked on stablecoins for the pound and the euro? #PayPalCoin $PYPL $PYPLUSD https://t.co/vyBmMCmp7f pic.twitter.com/qRJ0IrbBBJ
to???? Steve Moser (@SteveMoser) January 10, 2022
What if PayPal Coin is something different than PayPal’s USD stablecoin? What if PayPal also worked on stablecoins for the pound and the euro?
Shortly after PayPal Coin started making headlines, however, PayPal removed the images of its euro- and pound-pegged stablecoins. A reference to Neo has been retained in the code, suggesting he may also be on the company’s radar.
The actual impact a PayPal coin can have depends on the company’s implementation of the stablecoin.. While it has the potential to integrate cryptocurrencies into traditional payment systems, it also has the potential to be “just another” stablecoin. The best-case scenario appears to have been a dream of crypto enthusiasts years ago, before Bitcoin was trading in the five-figure range, showing how far we’ve come in just a few short years.