Coinbase (COIN) will introduce free conversions between PayPal's PYUSD stablecoin and the U.S. currency

The move, open to both retail and institutional customers, is part of a partnership aimed at promoting PYUSD as a payment currency.

Crypto exchange Coinbase (COIN) will introduce free conversions between PayPal's (PYPL) dollar-pegged stablecoin, PYUSD, and the U.S. currency, the company said on Thursday, in a move that could accelerate the shift toward on-chain payments.

The move, which will be open to both retail and institutional customers, is part of a partnership with PayPal aimed at promoting broader use of PYUSD as a payment currency. Coinbase will also use its platform to offer PYUSD to PayPal's extensive network of merchant partners, which could ease the use of stablecoins in everyday transactions.

"We are focused on making crypto more accessible to everyone and believe that this partnership will bring significant value to both Coinbase and PayPal users," said Coinbase product manager, Vijay Ravichandra.

Stablecoins - digital tokens pegged to traditional currencies, predominantly the dollar - are one of the fastest-growing sectors in crypto. They are marketed as a faster and cheaper alternative to legacy payment systems, and are increasingly popular for payments across borders. Standard Chartered has projected the sector to grow to $2 trillion by 2028 from the current $220 billion.

With regulation for stablecoins advancing in the U.S., the competition is heating up among issuers while banks and traditional payment firms are also eyeing the market.

Binance, the largest crypto exchange, and Circle, issuer of the second largest dollar-backed stablecoin, have already linked up to use Circle's USDC as a trading pair and payment method. Circle introduced a remittances network this week.

Market leader Tether, issuer of the $140 billion USDT, is mulling issuing a stablecoin designed for U.S. users.

Meanwhile, PayPal, whose stablecoin debuted in 2023 and has grown to $860 million, recently introduced a 3.7% annual yield on PYUSD for U.S. token holders to attract more users.