Giant payments processing firm, PayPal Holdings Inc. is mulling launching its own stablecoin. The revelation was made by a developer who discovered a project called PayPal Coin with the PayPal iOS app.
What Is A Stablecoin?
A Stablecoin is a type of cryptocurrency whose value is pegged to an asset such as gold or fiat currencies. One of the most famous stablecoin projects was the Facebook Libra project. While it never came to pass, the proposal was quite solid. Essentially, Libra, which was later changed to Diem, was proposed as a stablecoin whose value would be pegged to a basket of fiat currencies. Regulatory pressure, including from the Swiss regulator, which was the HQ for the project, caused massive delays and rebranding of the project. Eventually, numerous members of the Libra Association quit the project.
While Libra never came to pass, stablecoins have continued to be quite popular. The reason for this is that users of stablecoins do not need to send funds via the normal financial channels, which come with huge costs. Instead, users can simply make wallet-to-wallet transfers, which are fast, cheap, and secure. To this day, the largest stablecoins by market cap are Tether, USD Coin, Binance USD, TerraUSD, and Dai.
PayPal Confirms The News
After the initial revelation, PayPal confirmed the news. According to a report by Bloomberg, the company’s senior VP of crypto and digital currencies, Jose Fernandez da Ponte, said that they were exploring a stablecoin. He added that if they decided to move on with the project, they would work closely with regulators.
PayPal was among the original members of the Libra Association but they quit soon after due to regulatory pressure. They no doubt learned their lesson from the debacle and will approach the issue with more caution in the future.
However, the company added that the code discovered by the developer was not linked to those plans. The company said that the code was a result of an internal hackathon where engineers create and explore new products, which may never launch. Consequently, if PayPal ever goes ahead with a stablecoin, it could have a different logo, name, and other features.
PayPal And Crypto
Paypal has already entered the crypto sector in a big way. In October 2020, the company announced that users could now buy, hold, and sell Bitcoin, ETH, LTC, and BCH using their PayPal accounts. The service launched in the US with plans to expand to the UK in August. The move closely mirrored a similar one by payments processor Square, which supports the buying and selling of crypto. Commenting on PayPal’s entry into the crypto world at the time, the company’s CEO, Dan Schulman, stated that he foresaw a future where ordinary payments were made in crypto. In general, PayPal appeared quite optimistic about the future of crypto payments.
How Soon Could PayPal Launch a Stablecoin?
The sentiments expressed by the CEO at the time fit perfectly with the launch of stablecoin by PayPal. However, it will not be an easy task. Meta, formally Facebook, has had ambitions for a stablecoin for a few years. However, regulators and lawmakers have not been receptive to the idea. While the path for PayPal will likely be less controversial, it will not be easy. It is thus safe to say that it could take two or more years to launch a beta version of such a project.
Besides getting the regulatory aspect of such a project right, the project would also need to have the scale and security expected of a global payments processor. It would require a significant investment in resources and time. However, if any company were to succeed in the launch of a global stablecoin, the best bet would be PayPal.
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