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Cryptocurrency News Articles
PayPal Takes Bold Step with $PYUSD Stablecoin, Paving the Way for Wider Adoption
Oct 14, 2024 at 07:10 pm
In recent years, the world's top stablecoins have become very beneficial in the payments segment. More recently, their utility in cross-border trade and other developments have made them an undeniable star in the digital assets space.
Top stablecoins have seen increasing use in payments, especially in cross-border trade. Now, PayPal’s move with PYUSD might pave the way for broader adoption.
World's Top Stablecoins Might Be Coming to a Gov't Transaction Near You
In recent developments, PayPal completed its first business payment using the PYUSD stablecoin to settle an invoice with Ernst & Young LLP. The payments giant completed the transaction earlier this month.
Many crypto firms took note of the development, and experts across the industry pointed out that the move marks a new era of business-to-business stablecoin use.
For Ran Goldi, SVP of Payments and Network at leading institutional digital asset custody, settlement and issuance platform Fireblocks, PayPal's move is a "brave" one, considering the company's status as one of the leading fintech firms in the world.
“We will see many other payment companies and fintech follow. That would eventually move the needle, even if by a bit, until the entire financial ecosystem adopts blockchain," Goldi projected in an exclusive with International Business Times.
A Giant Leap Toward Broader B2B Stablecoin Transactions
Goldi revealed that the largest growing segment in the blockchain payments sector today is B2B.
“From our view at Fireblocks, we see that B2B payments account for 50% of total payment volume,” he added.
According to Goldi, PayPal "understands" the revolution and is "making progress toward educating its merchants to upgrade their rails."
So far, PYUSD is seventh in CoinGecko's rankings of the world's largest stablecoins by market value. With a market cap of $673.8 million (as of Sunday night), PYUSD has a long way to go before unseating Tether's USDT.
Still, PayPal's standing as a leader in global payments is a boon for suppliers who may still have trust issues when it comes to digital currencies.
The Challenges in B2B Stablecoin Use
In traditional finance, there is already the issue of trust, but there are various other considerations for broader B2B stablecoin use.
Internally, there's the matter of businesses still operating with fiat. "Zooming in, businesses still run on regular, real-world dollars, hence, they sometimes need to off-ramp from stablecoins back to dollars in their bank account," Goldi said.
Then there's regulation – a key issue in the broader blockchain and crypto space that remains a challenge for companies seeking to expand their B2B relations in the traditional financial realm.
"Zooming out, the ultimate challenge is still regulation. Today's view in the U.S. is that banks do not have enough comfort to service crypto-using customers. That is still a big challenge that only legal frameworks and regulations can solve in the long term," Goldi pointed out.
The U.S. has yet to come up with a regulatory framework for digital assets. The U.S. Securities and Exchange Commission (SEC), under Chair Gary Gensler, has refused to engage in new rulemaking to come up with regulations specifically for the emerging industry.
Can Stablecoins Become a 'Norm' in Government?
Beyond business and private finance, governments are also exploring stablecoins and their possible utility in government transactions.
"Stablecoins are being used today by governments across the world to disburse payments to individuals (sometimes even as a purpose-bound money, operated by a smart contract). While consumers will hopefully not feel the difference, eventually, we believe all forms of money will be tokenized, it is just a natural upgrade to existing financial systems," Goldi said.
Paving the Way for Wider Adoption
Fireblocks provides the underlying technology that issuers use to create their own stablecoins, issue blockchain wallets to their users, and manage the movement of payments, trades and other funds across the blockchain, in the most secure manner.
Fireblocks already projected back in 2021 that stablecoins "represent the treasury management of the future" for companies of all shapes and sizes.
With a leader in the payments sector proving that stablecoins can be used in B2B transactions, it may only be a matter of time before the "stable" digital currencies become the future of payments.
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