What We Know So Far?

PayPal is claiming its PYUSD as a digital asset fully backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents. The token is redeemable and can be bought or sold through the FinTech platform at a rate of USD 1.

Those purchasing PYUSD will be able to transfer the stablecoin between PayPal and compatible digital wallets, apart from sending the virtual asset to their near ones and making online product purchases. PYUSD users can convert any of the cryptocurrencies supported on PayPal to PYUSD.

PayPal USD, an ERC-20 token issued on the Ethereum blockchain, is currently available for consumers, merchants, and developers as a link between fiat and digital currencies. PayPal, which expects the stablecoin to be supported on wallets and Web 3, has tasked its project partner Paxos to publish a monthly report with details of the financial instruments backing PYUSD, which will take care of the stablecoin’s transparency aspect. This move will be similar to leading crypto exchange Binance’s ‘Proof of Reserves’ mechanism for its customers.

PYUSD will also be available on PayPal’s payments app Venmo.

As of August 2023, the crypto stablecoin market value is USD 125 billion, dominated by Tether and Circle-issued USD Coin USDC. We have Binance-supported stablecoins in the market too. What makes PYUSD special is that with this, a major fintech platform will be making its debut in the stablecoin space.

A Good Beginning

PayPal is joining the stablecoin space with the reputation of holding over 429 million customer accounts (till March 2022), facilitating transactions across American and global online stores through a convenient and reliable payment platform. The success of PYUSD is likely to fast-track the adoption of cryptocurrency into the mainstream financial ecosystem.

Stablecoins are known for enabling crypto investors to smoothly transition their digital assets into real-world currencies. PYUSD users will be able to perform international transactions with a simple click on their smartphones, while avoiding roadblocks like fees associated with currency conversions and fluctuating exchange rates.

Also, PYUSD’s compatibility with Web3 will lead its users to the domain of Decentralized Finance (DeFi). Crypto exchange Kraken has already introduced trading for PYUSD. Since its launch in August 2023, some 40.68 million PYUSD tokens have been freshly minted and as per the Etherscan data, the stablecoin has managed to gather 105 distinct holders.

PYUSD & Crypto Adoption In Traditional Finance

Michael Quintanilla, director of Web3 and blockchain software firm SoftServe, told the Cointelegraph that PayPal’s ability to modify PYUSD balances will help the fintech platform to prevent ‘illicit activities’, ‘unexpected large transfers’ and ‘incorrect stablecoin distributions’ on its websites and apps. PYUSD provides a sneak peek at how mainstream fintech platforms will participate in the crypto ecosystem.

On June 2023, EDX Markets, a noncustodial digital asset marketplace for institutional investors, made its market debut, with backing from Wall Street-based ventures Citadel Securities, Fidelity and Charles Schwab.

EDX Markets resembles more of a traditional stock market than a centralized crypto exchange, as it avoids asset custody and trading being performed by ‘intermediaries’. Also, by 2023 end, the exchange will start settling trades matched on the exchange through ‘EDX Clearing’. So here EDX is giving a glimpse of what the existing crypto exchanges should do to avoid the regulatory glare.

We have WisdomTree, Franklin Templeton and BlackRock all venturing into the crypto space, thus bringing the domain of traditional finance under the Decentralised Finance fold, while paying attention to the regulatory details. You have EDX Markets “onboarding only institutions and financial firms” and WisdomTree’s personal finance app excluding the digital tokens implicated by the US SEC on its platform.

Lama, a European cryptocurrency exchange, has become a specialised player in integrating traditional banking services with cryptocurrency transactions, while complying with PCI DSS and ISO 27001 security standards. It has also partnered with Ledger, a leading provider of institutional-grade custody service technology.

Japanese financial services firm Nomura launched its digital asset division, Laser Digital, in 2022. In 2023, the venture stepped into the DeFi world.

And now you have PayPal entering the same domain through its PYUSD. So, it’s evident. The ‘Impossible Marriage’ between Traditional Finance and Decentralized Finance is happening in a steady manner, while bringing the ‘regulatory standards’ into play in the DeFi space.

Industry Stakeholders Put Their Faith In PYUSD

After Kraken, another major crypto exchange Coinbase is going to embrace PYUSD on its platform.

While the industry has been hailing PYUSD’s launch, Crypto Twitter red-flagged the centralized structure of the virtual currency. Under this feature, the PYUSD owner can pause fund transfers, freeze addresses and allow the increase in the stablecoin’s total supply.

However, this feature can be found in Tether and USD Coin, allowing the stablecoin users to freeze the funds of threat actors. Even Kene Ezeji-Okoye, co-founder of digital infrastructure firm Millicent Labs, backs centralization to ensure the stablecoin’s protection against threat actors.

Michael Quintanilla, director of Web3 and blockchain software firm SoftServe, dubbed PayPal’s ability to modify PYUSD balances as a critical aspect, when it comes to the virtual currency meeting regulatory and operational standards.

PayPal has stated its intention to work closely with regulators, at a time when the crypto industry has become a hot topic of policy discussions in the United States.

American lawmakers are working on a stablecoin bill that proposes to make the US Federal Reserve the key regulator tasked with formulating requirements for issuing stablecoins, apart from granting other regulators powers to oversee the crypto industry players. The bill called the ‘Clarity for Payment Stablecoins Act’ was passed by the Financial House Committee in July 2023.

PayPal has the opportunity, through its PYUSD, to present a business model, where confirming the rulebook will be the most important guiding principle.

The post IF Insights: PYUSD and the hope of crypto industry ‘following rules’ appeared first on International Finance.

The biggest impact that blockchain-enabled DeFi projects can bring about is accessibility. With a few smartphone clicks, anyone on the globe can borrow or lend cryptocurrency. DeFi gives users more power over their possessions. Users can conduct trades utilizing decentralized exchanges or directly engage with the blockchain network to gain financial services.

The expansion of DeFi-based prediction platforms, where users can exchange money by correctly predicting the results of future events, has been spurred by the surge in DeFi adoption. Additionally, the public can validate and verify all blockchain transactions.

Using digital currencies and distributed ledger technology, payments may be scaled up more quickly, inexpensively, and effectively. Blockchain is being tested by even central banks because of its potential to save time, money, and effort. Additionally, it can help with the real-time gross settlement between independent, commercial, and central banks.

Also, the inherent security and openness of blockchain technology are helping it become more and more popular. Nearly 45% of financial intermediaries, including services for money transfers and stock exchanges, have been cyber attacks each year, which can be controlled by adapting blockchain technology.

Financial services such as the stock market, banking, asset management, and insurance could be completely transformed by blockchain technology.

The post DeFi & blockchain technology: Shaping the future appeared first on International Finance.

Cobo chief executive and co-founder Shixing Mao told the media, “With interest in the crypto revolution soaring across Asia, it’s high time to expand blockchain infrastructures to meet the rising demand, especially as we’re seeing growing enthusiasm among institutions.”

“In the past, we’d witness crypto applications evolve from Bitcoin to DeFi and now NFTs … Ultimately, this fundraising takes us another step closer to Cobo’s foundational vision of empowering 1 billion users to access crypto.”

Besides using the funds for the development of DeFi as a service (DFaaS) infrastructure, Cobo will also use the proceeds to further develop its existing custody services such as wallet as a service (WaaS), trading and staking as a service (StaaS).

A portion of it will also be used to apply for regulatory licenses to ensure strict compliance to the relevant anti-money laundering (AML) and counter the financing of terrorism (CFT) requirements.

Previously, Cobo raised around $13 million in its Series A funding round back in October 2018. The funding round was led by DHVC. Cobo was founded in 2017 by Jiang Changhao and Mao Shixing with a mission to bridge the gap between retail and institutional crypto investors and to increase access to blockchain for all.

The post Crypto asset management firm Cobo raises $40 mn to accelerate DFaaS development appeared first on International Finance.