After Diving Into Crypto, PayPal is Exploring the Possibility of Launching Its Own Coin

It's been quite a year for PayPal. The world's most popular payment processor has grown by tapping into crypto and offering crypto payments to customers.

After Diving Into Crypto, PayPal is Exploring the Possibility of Launching Its Own Coin

Now that PayPal has seen the benefit of a crypto offering, it's working on launching its own asset.

PayPal Coin is Coming

Earlier this month, Jose Fernandez da Ponte, PayPal's senior vice president of crypto and digital currencies, confirmed rumors that the company is developing a stablecoin. Da Ponte asserted to Bloomberg that the asset - PayPal Coin - is in the works.

The rumors of a PayPal asset started making rounds when iPhone app developer Steve Moser found the source code for what looked like a cryptocurrency in PayPal's iPhone app. Da Ponte finally confirmed, telling Bloomberg they will bring on the best developers and regulators to make PayPal Coin a reality.

As expected, the new asset will make it easier to pay with cryptocurrencies - especially when it comes to cross-border transactions.

In an interview from November 2021, da Ponte said PayPal still hadn't seen a stablecoin that could optimize payments. According to the company executive, a stablecoin should support payment processing at scale while keeping the payment network secure.

"There would have to be clarity on the regulation, the regulatory frameworks, and the type of licenses that are needed in this space," he added.

A Long Way to Get Here

PayPal first confirmed it would make crypto transfers and trading available in 2020. In September 2021, PayPal took a huge step forward, rolling out crypto trading for customers in the United Kingdom following months of rollouts in other countries. Now, British customers with verified identities will be able to trade Bitcoin, Ether, Litecoin, and Bitcoin Cash.

At the same time, PayPal announced the release of a new app that will help its customers with all digital payment needs, no matter how complex. CEO Dan Schulman claimed the new "super app" will allow PayPal's users to access the company's full suite of digital asset products.

Among other things, the new app covers both crypto and non-crypto functionalities. It comes with a wallet that allows users to manage crypto holdings and make payments, plus a high-yield savings product to grow wealth.

The savings product arose from a partnership with the online banking service Synchrony Bank. Customers can get up to 0.4 percent annual percentage yield on savings with the app and can withdraw earnings from the savings platform to their PayPal balance for use in transactions and payments.

Additional features of the new app include rebates and cashback, bill and utility payments, and direct deposits.

What Will the Regulatory Ramifications Be for PayPal Coin?

While the prospect of PayPal launching a cryptocurrency is exciting, it's worth noting that regulators can always put a hold on the asset.

For example, the past year has seen growing calls for regulation of stablecoins in the U.S. The assets, which are pegged to the dollar, have faced massive scrutiny.

Last month, Nellie Liang, undersecretary of the Treasury for domestic finance, fueled additional speculation, claiming if Congress doesn't do something about stablecoins, regulators will use whatever power they have to regulate the assets.

As Liang explained, the Treasury Department has limited powers on stablecoin regulation. Whatever it does will require Congress' backing.

"They can do a little here and a little there, but if these are foundational to crypto-assets and they aren't stable, that could potentially be a big risk," Liang added.

Social media giant Meta has been trying to launch a stablecoin for the past three years, but regulators and Congress have held it back. Time will tell if they will do the same with PayPal.

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