PayPal’s PYUSD Stablecoin: A Profit-Maximizing Move
PayPal’s announcement of issuing a U.S. dollar stablecoin on the Ethereum network has sparked excitement in the crypto world. However, the motivation behind this move may not be solely driven by technology. PayPal stands to benefit financially by collecting the interest on users’ dollars through PYUSD.
Key Points:
- PYUSD will be backed by dollar bank deposits and liquid equivalents, with short-dated U.S. Treasuries offering a 5% yield.
- PayPal aims to keep the interest earned on customer deposits, which is a significant revenue opportunity.
- Users should be cautious about leaving money with PayPal as it carries the risk of seizure, and PayPal doesn’t pay any interest.
- PayPal’s “Revenues from other Value Added Services” category, which includes interest revenue on customer deposits, has been growing faster than transaction fee revenue.
- A stablecoin like PYUSD could encourage users to hold more money in their PayPal accounts and spend it without it ever leaving PayPal’s coffers.
Overall, PayPal’s move into the stablecoin space seems to be driven by the potential to generate more revenue through interest on customer deposits. While it could benefit the crypto sector, the primary beneficiary will likely be PayPal itself, as it seeks to maximize its profits.
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