Payments giant PayPal made waves this week with the announcement that it has launched a U.S. dollar-backed stablecoin, becoming the first major financial technology firm to embrace digital currencies for payments and transfers. A Milestone for Mainstream Adoption While stablecoins have been around for years, they have yet to successfully penetrate the mainstream consumer payments ecosystem. PayPal's move reflects growing confidence in the oft-maligned crypto industry after a turbulent year marked by regulatory clampdowns and high-profile collapses. Overcoming Regulatory Hurdles Prior attempts by major companies like Meta to launch stablecoins met fierce opposition from financial regulators over concerns about potential risks to financial stability. However, PayPal appears to have threaded the needle and secured regulatory approval for its new USD-backed stablecoin. The launch comes as policymakers around the world finalize new rules to govern stablecoins. The EU's new policies will take effect in mid-2024, while a bill focused on stablecoin regulation recently advanced in the U.S. House. How PayPal USD Works Backed 1:1 by bank deposits and short-term U.S. Treasuries, PayPal USD will be issued by Paxos Trust Company. It will gradually roll out to PayPal consumers in the United States in the coming months. PayPal's vast user base gives its branded stablecoin far-reaching potential. However, the company already had existing ties to crypto via services enabling customers to buy, sell, and hold Bitcoin and other digital assets. Wider Crypto Adoption Accelerating PayPal isn't the only payments firm embracing crypto. Last year, Visa announced plans to settle transactions on its payment network using cryptocurrency. Moves like these signal crypto's momentum toward mainstream adoption despite ongoing market volatility. The launch of PayPal USD stablecoin is a milestone in fintech's evolving relationship with digital currencies. However, regulatory uncertainty persists, and it remains to be seen whether stablecoins can truly reinvent payments and transfers for the digital age. Their success will hinge on gaining broad consumer and merchant acceptance. Sources: Report by Jaiveer Singh Shekhawat and Manya Saini in Bengaluru and Tom Wilson in London Editing inputs from Nivedita Bhattacharjee, Shounak Dasgupta, and Shinjini Ganguli. Thank you for reading “PayPal Becomes First Major Fintech to Launch Dollar-Backed Stablecoin“. Subscribe to our newsletter: l Consensus Protoco Follow us on Twitter: Twitter Also published . here

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