PayPal Plans to Offer Users a 3.7% Return If They Hold the Company's PYUSD Stablecoin

PayPal plans to offer users a 3.7% return if they hold the company's PYUSD stablecoin in their PayPal or Venmo wallets, according to a Bloomberg report.

PayPal is planning to offer users a 3.7% return if they hold the company’s PYUSD stablecoin in their PayPal or Venmo wallets, according to a Bloomberg report.

The company is aiming to launch the offering this summer in the United States.

It is part of broader efforts by the company to encourage adoption of the stablecoin on the PayPal network.

The company launched its stablecoin in November and it is fully backed by U.S. bank deposits and short-term Treasury securities.

The report said that the offering will see rewards accrue daily and be paid out monthly.

It is the latest development in the fast-moving world of crypto derivatives.

Currently holders of the USDC stablecoin on Coinbase can earn 4.1% rewards in the United States.

Coinbase had a half ownership stake in USDC, until transferring it to Circle. But it still earns more interest on the stablecoin’s assets than Circle, according to Circle’s IPO filing.

In some jurisdictions such as Europe, stablecoins are considered to be e-money which is not allowed to earn interest.

Draft US stablecoin legislation would prohibit interest

Draft legislation for stablecoins is currently being debated in both the House (STABLE Act) and the Senate (GENIUS Act).

Both the latest legislation drafts included clauses banning the payment of interest or yield by the issuer to stablecoin holders. The likely rationale is to safeguard bank deposits. If banks have to pay more to deposits holders, then loans will get more expensive.

However, Coinbase is not the issuer of USDC, so technically it may be free to pay interest, even though it receives the interest on the underlying assets. And PayPal’s stablecoin is issued by Paxos, despite PayPal recently receiving a New York trust charter. Of course, Paxos will pay most of the interest on the reserves to PayPal.

So, if legislators really don’t want to see interest paid on stablecoins, they may need to apply the ban on interest more broadly. Potentially it won’ bậtcoin will be able to pay interest.

Earlier this year, Figure announced a new token that is being registered with the SEC as a security and will pay interest to investors.