Anchorage Digital has launched a rewards program for clients who custody PayPal USD stablecoins with the crypto custodian, according to an Aug. 22 announcement.
The program is the first of its kind at Anchorage Digital and applies to clients who custody PayPal USD (PYUSD) with Anchorage Digital or with its institutional self-custody wallet, Porto.
“PYUSD remains fully accessible and segregated in participants’ accounts on-chain for quick deployment,” according to the announcement. “Importantly, this program presents a way to earn rewards without rehypothecation, staking, or lending involved.”
PayPal launched PYUSD in 2023. The stablecoin is backed 1:1 by US dollars and is issued by Paxos Trust Company, a US-regulated crypto custodian. It competes with other dollar-backed stablecoins such as Circle Internet Financial’s USD Coin (USDC).
PayPal launched its US dollar-backed PYUSD in February. Source: PayPal
Stablecoins such as PYUSD offer several benefits over fiat currency, including programmability, ease of transfer and self-custody, among others. They are especially popular for global remittances.
“As an ERC-20 token issued on the Ethereum blockchain, PayPal USD will be available to an already large and growing community of external developers, wallets and web3 applications,” PayPal said in a February announcement.
Related: Exclusive: Fireblocks granted New York charter for crypto custody
Coinbase — which also has an institutional custody arm — is also incentivizing users to hold stablecoins on its platform. It currently offers approximately 5.2% annual percentage yield on USDC. Coinbase owns an equity stake in Circle.
Anchorage Digital is a regulated digital asset custodian for institutional clients. In February, it launched Porto as a self-custody solution for users such as venture funds and sovereign wealth funds.
Regulated digital asset custodians such as Anchorage Digital are proliferating in the United States. In August, Cointelegraph reported that Fireblocks — best known for its self-custodied treasury management products — obtained approval from New York’s financial regulator to custody assets for US clients.
Other institutional crypto companies — including Coinbase Custody Trust, Fidelity Digital Asset Services and PayPal Digital — are also similarly licensed.
“Crypto innovators want to put their treasury cash to work but cannot compromise on asset security or accessibility,” Nathan McCauley, CEO Anchorage Digital, said in a statement.
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