How stablecoin will PayPal affect the crypto market and what's wrong with it
Date: 2023-08-09 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
Members of the crypto community spoke about the possible consequences of the launch of the PayPal stablecoin and drew attention to the “pitfalls” of the financial instrument
What's happened
On August 7, 2023, PayPal, one of the world's largest payment companies, announced the launch of its own stablecoin. The "stable coin" - PayPal USD (PYUSD) - based on Ethereum will be pegged to the US dollar. Paxos will be the issuer of the token.
Representatives of the payment system explained the decision to issue a stablecoin with a desire to strengthen PayPal's position in the digital payment market.
What's Wrong With PayPal's Stablecoin
The news about the launch of the stablecoin PYUSD came as a surprise to the members of the crypto community. The fact is that in February 2023, PayPal announced the suspension of work on the project, citing regulatory uncertainty in the United States. Paxos faced regulatory pressure during this period. Recall that US regulatory authorities found signs of a security in the stablecoin of the Binance crypto exchange - Binance USD (BUSD), the issuer of which was the company.
Chinese journalist Colin Wu drew attention to another curious detail. According to him, initially PYUSD was planned to be released in partnership with the FTX crypto exchange, the same one that collapsed in November 2022, dragging the entire digital asset market to cyclical lows. At the same time, the stablecoin itself, writes Colin Wu, was supposed to work for Solana. One of the main investors in the project was FTX. Therefore, against the backdrop of the collapse of the crypto exchange, members of the crypto community started talking about the possible death of Solana.
Messages spread across the network with the analysis of the stablecoin code. Members of the crypto community drew attention to the fact that PayPal, if necessary, will be able to freeze token funds. According to netizens, the censorship that will surround transactions with the payment company's stablecoins makes it possible to compare the instrument with a central bank digital currency (CBDC).
As of the time of writing the review, company representatives have not commented on the suspicious details of the code.
The reaction of the crypto community
Charlie Shrem, founder of The Bitcoin Foundation and Crypto Investor Network, believes that the launch of the PayPal stablecoin will help the digital asset market grow.
“The launch of Paypal stablecoin will help Bitcoin get to $250,000 faster than expected. Also, the event will accelerate the growth of ETH tenfold,” Charlie Shrem wrote in his microblog.
Analyst Michael van de Popp agreed with the opinion that the launch of the stablecoin PayPal will support the growth of the digital asset market.
“In 2023, one of the largest asset managers [BlackRock] applied to launch a bitcoin ETF. In the same year, the largest fintech company [PayPal] launches a stablecoin. Do you still think bitcoin will drop to $12,000? Think again."
Screenshot of Michael van de Popp's message Screenshot of Michael van de Popp's message. Source: microblog
