**PayPal Launches Stablecoin Linked to U.S. Dollar**
*Payments giant PayPal, which was founded by Elon Musk, Peter Thiel, Yu Pan, and others, has made a ground-breaking announcement. The company revealed on Monday its plan to launch a stablecoin pegged to the U.S. dollar. This move has marked PayPal as the first major financial technology firm to incorporate digital currencies for payments and transfers.*
### Positive impact on the shares
The news had a positive impact on the company’s shares, lifting them by 2.66 per cent. This demonstrates the positive response and confidence from investors in PayPal’s decision to venture into the world of stablecoins.
### A new era for stablecoins
Stablecoins, a type of cryptocurrency designed to mitigate volatility by pegging their value to a stable asset, have been in existence for several years. However, they have yet to gain significant traction in mainstream consumer payments, mainly serving as a means to trade other cryptocurrencies such as Bitcoin and Ethereum. Tether remains the largest stablecoin, followed by USD Coin, issued by crypto provider Circle.
### Details of PayPal’s stablecoin
PayPal’s stablecoin, named PayPal USD, is backed by U.S. dollar deposits and short-term U.S. Treasuries and will be issued by Paxos Trust Co. Its gradual availability will be limited to PayPal customers in the United States. An advantage of this stablecoin is that it can be redeemed for U.S. dollars at any time and can also be used to facilitate the buying and selling of other cryptocurrencies offered on PayPal’s platform, including Bitcoin.
### Challenges and regulations
Previous attempts by major mainstream companies to introduce stablecoins have encountered resistance from financial regulators and policymakers. Meta’s plan to launch Libra, a stablecoin, was thwarted in 2019 due to concerns about potential disruptions to global financial stability. In response to the growing interest in stablecoins, several major economies, including the European Union and Britain, have recently established regulations to govern these digital assets, with the EU’s policies scheduled to take effect in June 2024.
### PayPal’s history and founder
It is worth noting that in 2002, PayPal was acquired by eBay for $1.5 billion in stock. Musk, the founder and the largest shareholder of the company with 11.72 per cent holding, received $175.8 million from the buyout.
This announcement from PayPal marks a significant shift in the world of digital payments, and it will be interesting to see how the introduction of stablecoins impacts the market and consumer behavior in the coming months.
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