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PayPal confirmed on Jan. 8 it is \u201cexploring a stablecoin\u201d that could be called PayPal Coin after a developer found evidence of such a stablecoin within the source code of the company\u2019s iPhone app.<\/p>\n
PayPal senior vice president of crypto and digital currencies Jose Fernandez da Ponte said at the time that if the company plans to move forward with the stablecoin, it will do so while working closely with relevant regulators \u2014 an approach that could help the fintech firm avoid the wrath of United States senators<\/a> that doomed Meta\u2019s Diem cryptocurrency project<\/a>.<\/p>\n The company has clarified that the source code found on its iPhone app was developed in an internal hackathon. When Cointelegraph contacted PayPal to learn more, a spokesperson confirmed the previous reporting<\/a> but did not offer any additional commentary.<\/p>\n The potential impact of a PayPal stablecoin in payments overall and in the cryptocurrency industry is hard to estimate, and while some experts see the firm\u2019s move as an extremely positive one for the space, others believe the stablecoin would be more of the same.<\/p>\n It\u2019s clear that a traditional finance company moving into the cryptocurrency sector and launching its own stablecoin differs from a crypto-native firm launching a stablecoin. Traditional finance companies serve users who aren\u2019t necessarily already dealing with cryptocurrency wallets<\/a> or the volatility in this space.<\/p>\n PayPal itself has well over 350 million active users and already lets users in the U.S. and United Kingdom buy, sell and hold<\/a> Bitcoin (BTC<\/a>), Ether (ETH<\/a>), Bitcoin Cash (BCH<\/a>) and Litecoin (LTC<\/a>) while enabling payments in these crypto assets. While it\u2019s unclear how many of PayPal\u2019s users have paid with cryptocurrency, it\u2019s well-known that stablecoins are mostly a tool used to trade and take advantage of opportunities in the decentralized finance space.<\/p>\n PayPal further pushing into the cryptocurrency industry through the launch of a stablecoin could see other traditional banking and payments companies explore blockchain technology more, according to Marwan Forzley, CEO of online payments platform Veem. Forzley told Cointelegraph that stablecoins will \u201clikely become a part of the global payment scheme,\u201d as moving money in a secure environment with on- and off-ramps with different applications \u201cis a major need of small businesses.\u201d Forzley added:<\/p>\n \u201cPayPal Coin could fuel general interest in payments overall. Consumers and small businesses alike are looking for a safe and reliable alternative to traditional currencies and payment networks.\u201d<\/p><\/blockquote>\n Max Galka, CEO of blockchain search engine Elementus, seemed to agree with Forzley\u2019s assessment, noting that with globally recognized platforms such as PayPal supporting cryptocurrencies, stablecoins are immediately put in a \u201ctrusted realm for a large swath of the population.\u201d<\/p>\n To Galka, PayPal launching its own stablecoin would \u201cdefinitely open up cryptocurrency to more people\u201d who \u201chave not had the inclination to really figure out this niche space.\u201d Galka told Cointelegraph:<\/p>\n \u201cRight now, there aren\u2019t that 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 embrace crypto.\u201d<\/p><\/blockquote>\n He said it\u2019s a \u201cvery natural fit for PayPal to develop a stablecoin,\u201d as the move puts the firm \u201csquarely on the map as a cryptocurrency company,\u201d which could boost its other cryptocurrency offerings, while the trust people have in the firm could see PayPal Coin \u201cserve a lot of additional purposes from what traditional stablecoins can offer by using that [trust] as their payment rails.\u201d\u00a0<\/p>\n Arbel Arif, founder and CEO of crypto marketplace Shopping.io, told Cointelegraph he applauds PayPal\u2019s move into the crypto sectors and added that having \u201cbig players enhancing the e-commerce crypto transactions brings us a step closer to the new era of commercial trading.\u201d<\/p>\n Speaking to Cointelegraph Tim Frost, founder and CEO of wealth management platform Yield App, said that cryptocurrency payments are \u201cfinding their way into the mainstream\u201d as a \u201cnumber of companies now allow digital asset owners to pay with digital currencies using standard Visa or Mastercard.\u201d<\/p>\n To Frost, whether or not PayPal launching its own stablecoin would jumpstart a transition to a more cryptocurrency payment-focused world isn\u2019t clear, although he does believe it has the potential to do so.\u00a0<\/p>\n Not everyone agreed that PayPal Coin could be revolutionary, however. Speaking to Cointelegraph, Rytis Bieliauskas, chief technology officer of cryptocurrency payment gateway CoinGate, said he does not see how a PayPal stablecoin is \u201cfundamentally different from what PayPal already does,\u201d assuming it\u2019s \u201ccentrally controlled\u201d and has its value guaranteed by the firm.<\/p>\n Bieliauskas added that it\u2019s \u201cinteresting to see that PayPal wishes to use crypto as a positive PR move,\u201d which, to him, suggests the public now sees cryptocurrencies as something positive, rather than negative.<\/p>\n While PayPal made it clear it would be working with relevant regulators on its stablecoin if and when it moves forward with the project, it will still have to overcome regulatory challenges because of the scope of its business.<\/p>\n That\u2019s according to Eli Taranto, chief business development officer at EQIBank \u2014 a licensed digital bank working with corporations and high-net-worth individuals. Taranto told Cointelegraph that PayPal\u2019s geographical footprint will see it face \u201cworldwide regulatory issues\u201d when it comes to crypto, which will \u201cbe quite interesting and a necessary challenge.\u201d<\/p>\n To Taranto, PayPal\u2019s revenue coming from transactions means it will \u201chave to connect as many tokens and chains as possible, building faster, better, fully automated cross-chain instruments along the way.\u201d He added:<\/p>\n \u201cThis may eventually serve as a catalyst for mass adaptation of crypto and give the crypto processing industry a boost, as venture capital will begin to flow to this relatively new sector.\u201d<\/p><\/blockquote>\n Taranto said that if PayPal manages to appease regulators, it will affect other institutions, which will \u201csee it as a sign that a path to global regulatory compliance has been created.\u201d<\/p>\n Stablecoin issuers have notably not only faced scrutiny from regulators, as the cryptocurrency community often pressures them to be as transparent as possible about the backing of their stablecoins. Launching a stablecoin will see PayPal deal with heightened scrutiny, so it\u2019s worth asking, What\u2019s in it for them?<\/em><\/p>\n Ultimately, PayPal issuing its own stablecoin is an improvement to its bottom line. Caleb Silver, editor-in-chief at financial information portal Investopedia, pointed out that in the third quarter of 2021, transaction-related expenses cost PayPal $2.7 billion according to its most recent quarterly filing.<\/p>\n The use of a high transaction throughput blockchain like Solana could see PayPal save a very significant amount in transaction-related expenses. The firm currently does not allow users to buy or sell Solana (SOL<\/a>) on its platform, and on which blockchain it would deploy its stablecoin is unclear.<\/p>\n Speaking to Cointelegraph, Jerald David, president of digital asset investment firm Arca, said PayPal is \u201cuniquely positioned to adopt cryptocurrencies due to their captive client audience and because this potential product offering is an enhancement to their existing core business.\u201d David added:<\/p>\n \u201cBy marrying the efficiencies of blockchain technology with their existing business model, they can help instill and solidify the confidence of individuals and small businesses in the digital asset industry.\u201d<\/p><\/blockquote>\n To Arca\u2019s president, it\u2019s likely that if people are going to end up adopting digital assets one day, they\u2019ll be doing so through a third party that has earned their trust, just like PayPal.<\/p>\n What\u2019s known about PayPal\u2019s stablecoin plans is very little. Steve Moser, the developer who found PayPal Coin\u2019s code on the company\u2019s iPhone app, revealed later on that PayPal had references to stablecoins linked to the pound and euro within the application, suggesting PayPal would launch various stablecoins linked to different fiat currencies.<\/p>\n What if PayPal Coin is something separate from Paypal\u2019s USD stable coin? What if PayPal was also working on stable coins for the Pound and the Euro? #PayPalCoin<\/a> $PYPL<\/a> $PYPLUSD https:\/\/t.co\/vyBmMCmp7f<\/a> pic.twitter.com\/qRJ0IrbBBJ<\/a><\/p>\nCould PayPal Coin normalize crypto payments?<\/h2>\n
Overcoming regulatory challenges<\/h2>\n
How PayPal benefits from a stablecoin<\/h2>\n
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