Following on from the announcement that PayPal has launched its first-ever US dollar stablecoin, one of the payment company’s crypto and blockchain chiefs has revealed why now is a better time than ever to launch.
Jose Fernandez da Ponte, SVP, Blockchain, Crypto and Digital Currencies at PayPal, told CNBC in an interview that its stablecoin PYUSD, or PayPal USD, has been a long time coming and sets out to offer a new alternative to how its users make transactions.
Fernandez da Ponte explained: “We have been in this process for a long time and we decided that the right time to do this is now. We do think that stablecoins are the killer app for blockchain technology right now.
“We are a payments company, so we are very intrigued on new technologies that can impact the payment space and the innate advantages, in terms of cost and programmability of stablecoins is something we cannot just sit out.
“We see that there is interest and demand for additional tokens in this space and we see that relation moving forward in combination with this being also the right time.”
The stablecoin is backed and pegged to a fiat currency, such as the US dollar, in order to maintain its value and significantly reduce the risk of volatility, often a criticism of many private cryptocurrencies, especially after the several high-profile collapses that occurred in the sector last year.
PYUSD was published by Paxos and is 1:1 backed by the US dollar – similar to other US native stablecoins such as USDC – and will be rolled out to US users in the coming months.
Fernandez da Ponte was asked whether its stablecoin will rival and potentially overthrow fiat currency payments, in which he believes whilst crypto transactions have many benefits, the process is still in its infancy.
He outlined: “This is going to be a process. In the past, there were cost advantages, definitely programmability advantages that you cannot do with fiat and settlement times.
“With cryptocurrency payments, you can usually have settlement times that can take seconds to minutes, where with traditional payment methods you are sending a wire internationally which can take days to settle.
“So when you are a merchant and you are intrigued about accelerating the time it takes for you to receive money, this is a very good application for that.
“But I don’t think that the revolution will happen overnight. It is going to be a process in which we are on the way toward mainstream adoption.”
Becoming one of the largest payment services to offer its own native stablecoin to its customers, PayPal will now be providing crypto users with even more stablecoin options alongside the likes of USDC and Tether.
Despite the $120bn market cap stablecoins currently has, the PayPal blockchain SVP believes that they are simply adding to this pie chart with the goal squarely on bolstering adoption from outside users and not competition.
He said: “We don’t think of the goal in terms of competition. We do think that we are still very early in crypto and definitely very early in stablecoins. As of last weekend we see a $120bn (market cap) in stablecoins so we don’t think that is where it stops.
“This is going to be all about enlarging the pie. We see the appetite from users who want alternatives and a market that is less concentrated and we think we have a place in that market, we expect what this will do is to increase the pie and the move towards stablecoins.”
