Senior vice president of cryptocurrency and digital currencies at PayPal, Jose Fernandez da Ponte said that if the company expects to press forward with the stablecoin, it will do so while working closely with relevant regulators. This approach could help the fintech company avoid the wrath of US senators that killed Meta's Diem cryptocurrency project.
He added that stablecoins provide “a really intriguing opportunity to have significant payment activity on new rails, whether that's on CBDCs, private stablecoins or something else — which is very close and very core to our business.”
Volatility is, without a doubt, the most serious issue with all cryptocurrencies. It's what's preventing many large – and small – companies from implementing this form of the payment system. Stablecoins, on the other hand, might be the answer. 'Stablecoins are virtual currency,' explains Bob Mason. Unlike Bitcoin (BTC) and Litecoin (LTC), the values of these coins are tied to traditional assets.
For instance, the US Dollar, in the case of USD Tether (USDT), or gold, in the case of the gold-backed Paxos Gold (PAXG) stablecoin. If this strategy works, it may pave the way for other digital currencies to follow suit.
Furthermore, stablecoins and central bank digital currencies (CBDCs) will undoubtedly play a key role if digital currencies are seen as the future of payments. While CBDC may take a while to arrive, it makes sense to offer a PayPal Coin rather than a third-party stablecoin.
With PayPal’s stablecoin, venture capital will begin to flow into this relatively new sector, which might serve as a catalyst for mainstream adoption of crypto and give the crypto processing business a boost.
PayPal could have taken this move to become more competitive in the cross-border remittance industry, where evidence suggests that 23% of US consumers who send remittances do so using cryptocurrencies on the public blockchain.
In September 2021, a PYMNTS/Stellar Development Corporation research estimated that costs related to US outbound remittances totaled $3.5 billion on average. Stablecoins have the potential to lower fees and speed up remittances while also giving PayPal users on both sides of the transaction another reason to choose PayPal as their Super App.
A PayPal Coin may also serve as a Super Currency within PayPal's Super App, a branded currency similar to Facebook's 2010 vision with Facebook Credits. With 32 million merchants and 400 million consumers, a branded currency would have a higher chance of succeeding as a currency within the PayPal ecosystem than it did for Facebook in 2010.
According to Marwan Forzley, CEO of online payments platform Veem, "PayPal Coin could fuel general interest in payments overall. Consumers and small businesses alike are looking for a safe and reliable alternative to traditional currencies and payment networks."
There aren't many well-established, trustworthy firms in the crypto market right now, where confidence is so important. PayPal is expected to be one of the first large financial institutions to accept cryptocurrency payments. Moreover, big firms like PayPal boosting e-commerce crypto transactions get us one step closer to a new era of commercial trading.
The true impact of a PayPal Coin will be determined by how the corporation implements the stablecoin. It has the potential to integrate crypto into regular payment systems, but it also has the risk of becoming 'just another' stablecoin. The best-case scenario appears to be one that crypto aficionados fantasized about years ago, before Bitcoin hit five figures, demonstrating how far we've come in only a few years.