PayPal will allow all United States users outside the state of Hawaii to fund money transfers to family and friends abroad using U.S. dollars converted from its native stablecoin PayPal USD (PYUSD).
According to the April 4 announcement, the service, powered by PayPal’s Xoom, is able to fund money transfers via PYUSD to more than 160 countries with no Xoom transaction fees. "By introducing the option to fund cross-border money transfers with USD converted from PYUSD, Xoom now offers an easy and reliable way for U.S. users to send money abroad using PYUSD as a funding source,” the company wrote, adding:
"When this option is selected, Xoom will convert the PYUSD in a U.S. user's PayPal Cryptocurrency Hub to USD currency with no crypto sale fee, and recipients will receive funds in the fiat currency selected by the sender."
Through the service, funds can be sent abroad either to a recipient’s bank account, a mobile wallet address or to a financial institution for pickup. Transactions not denominated in U.S. dollars will be subject to currency conversion, which includes a spread. All U.S. users can use the service except in Hawaii, where the holding of cryptocurrencies with PayPal is prohibited by state law.
The issuance of and custody of PayPal USD is performed by Paxos Trust Company in New York. Since its launch last August, close to $200 million PYUSD has been issued, a number well below USD Coin’s (USDC) market cap of $32.9 billion and Tether’s (USDT) $110 billion. Jose Fernandez da Ponte, senior vice president of PayPal’s Digital Currency Group, said that the firm’s goals surrounding PYUSD are to create “a stable value to maximize user confidence and ensure it had utility for commerce and payments.”
The same day, Ripple announced it would launch its own U.S. dollar-backed stablecoin to rival the $150 billion stablecoin market. Similarly, on April 3, Nick van Eck, the son of investment management maestro Jan van Eck is set to launch a new United States dollar-backed stablecoin after closing a $12-million funding round.