PayPal has made waves in the crypto and FIAT space after hinting that the company is looking to explore its own stablecoin.
Stablecoins are currencies based on blockchain technology and which, unlike mainstream cryptocurrencies, have their value pegged to a FIAT currency.
Most popular among those is Tether or USDT, which has the exact value of the US dollar.
PayPal Coin will be something similar, although PayPal told Bloomberg that the name was not final.
Senior VP of crypto and digital currencies Jose Fernandez told the publication that the company is exploring a stablecoin, but there was no date as to when the company may be pushing ahead with this solution.
PayPal was one of the first companies to begin supporting crypto in the US and on a global scale. It made it possible for vendors to accept payments in Bitcoin and other select cryptocurrencies while still receiving money in FIAT back in 2020 which, in turn, unlocked a bullish run for crypto, or at least contributed to it.
This means that PayPal can issue a currency that benefits from the transactional speed of conventional currencies and is equally secured in an existing financial mechanism, the US dollar, for example.
The feature that PayPal introduced previously, enabling crypto transactions, has been facilitated by its subsidiary, Venmo.
PayPal also partnered with Paxos, the startup behind the Pax Dollar (USDP), another stablecoin mechanism. Paxos is valued at $1.05bn in terms of the currency’s global market.
Given that PayPal has a market cap of $220bn, the introduction of a dedicated stablecoin could quickly create a new currency.
While stablecoins have been generally accepted by the crypto community, and some have argued that they combine the best of both worlds, there are downsides.
For one, stablecoins are said not to have any solvency because while they are pegged to a real currency, there is not enough cash equivalent to support them.