PayPal’s ideas for monetizing its stable crypto PYUSD

First payments player to launch a stablecoin dollar (PYUSD), PayPal aims to diversify its sources of incomeand not only thanks to yield generated by reserves.

Global payments giant, PayPal took its time with crypto, but its ambitions in this sector are now indisputable. At the end of March 2023, its customers held $943 million in their PayPal wallets.

In early August, after a few months’ delay, the company launched its stablecoin PYUSD backed by the US dollar. PayPal has thus become the first global payments operator to have such a token.

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Reserves, a high-margin source of income

But how does fintech plan to monetize this new product? There are many ways of doing this. The most obvious monetization solution is to derive interest from the stablecoin’s reserve assets.

Dollar deposits and short-term Treasury bills, such as those held by Tether and Circle for their respective stablecoins. USDT and USDC, historically generate a “high-margin income stream”.

This is emphasized by Jose Fernandez da Pontesenior vice president of blockchain, crypto and digital currencies at PayPal.

Payment streams to monetize PYUSD

The company shouldn’t deprive itself of this monetization source, he suggests on Bloomberg TV. But it won’t be confined to this one economic option either, adds the executive.

Over time, as a payment company, we want to generate payment flows that we will monetize in different ways, beyond monetizing the reserve,” says Fernandez da Ponte.

At this stage, the framework does not specify the exact nature of these future modes of remuneration enabled by the issuance of a stablecoin. Similarly, PayPal’s vice-president dodges any questions about the financial terms of the agreement with Paxos.

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Crypto objectives, money transfers and gaming

To generate interest in and adoption of PYUSDthe fintech warned that it would not pay yield to its users. The practice is not non-existent. TerraUSD had already developed this type of incentive.

Its development in the stablecoinsPayPal plans to initially focus on the crypto sector. Gradually, it hopes to penetrate other markets, such as money transfers and gaming.

One of the areas where we think we’re different and where we can add value is in last-mile connectivity thanks to the network we’ve built over the years,” comments Jose Fernandez da Ponte on transfers.

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