What is PayPal USD (PYUSD)?
PayPal USD (PYUSD) is a regulated stablecoin pegged 1:1 to the US dollar, issued by Paxos Trust Company on behalf of PayPal. Available on Ethereum and Solana, PYUSD is backed by US dollar deposits, short-term US Treasuries, and cash equivalents. It competes with established stablecoins like USDT and USDC but leverages PayPal's 400M+ user base for mainstream adoption.
Key Facts
What is PayPal USD?
PayPal USD (PYUSD) is a fiat-backed stablecoin designed to bridge the gap between traditional payments and the cryptocurrency ecosystem. Issued by Paxos Trust Company under the supervision of the New York Department of Financial Services (NYDFS), PYUSD maintains a 1:1 peg to the US dollar through reserves of US dollar deposits, short-term US Treasuries, and cash equivalents. It is available on Ethereum and Solana.
Paxos Trust Company serves as the issuer and reserve custodian for PYUSD. As a New York-regulated trust company, Paxos is subject to capital reserve requirements, regular examinations, and must publish monthly attestation reports by an independent accounting firm verifying that PYUSD reserves fully back all tokens in circulation. Unlike USDT, PYUSD is explicitly regulated by a US authority. Like USDC, it emphasizes transparency and compliance.
What makes PYUSD unique among stablecoins is its native integration with PayPal and Venmo. PayPal's 400M+ active users can buy, sell, hold, and transfer PYUSD directly within the PayPal and Venmo apps — no separate exchange account or crypto wallet required. This gives PYUSD a distribution advantage that no other stablecoin possesses.
Who Created PYUSD? A Brief History
PayPal's Crypto Journey
PayPal began its cryptocurrency journey in October 2020 when it enabled US users to buy, sell, and hold Bitcoin, Ethereum, Litecoin, and Bitcoin Cash within the PayPal app. This made PayPal one of the first major payment companies to offer crypto services. In 2021, PayPal launched 'Checkout with Crypto,' allowing users to pay merchants using their crypto holdings.
The Launch of PYUSD
On August 7, 2023, PayPal announced PYUSD — the first stablecoin issued by a major US financial technology company. PayPal chose Paxos Trust Company as the issuer due to Paxos's track record with regulated stablecoins (Paxos previously issued BUSD for Binance and its own Pax Dollar). PYUSD initially launched on Ethereum as an ERC-20 token.
Key Milestones
- • 2023: PayPal enables crypto buying/selling for US users (Bitcoin, Ethereum, Litecoin, Bitcoin Cash).
- • 2023: 'Checkout with Crypto' launches; Venmo adds crypto support.
- • 2024: PYUSD launches on Ethereum, issued by Paxos Trust Company under NYDFS oversight.
- • 2024: PYUSD expands to Solana; PayPal becomes first major fintech with a multi-chain stablecoin.
- • 2024: PYUSD market cap grows; integration with DeFi protocols on Solana accelerates adoption.
- • 2025: PYUSD surpasses $1 billion in total supply; PayPal expands crypto features globally.
Solana Expansion
In May 2024, PayPal expanded PYUSD to the Solana blockchain, citing Solana's high throughput and low transaction fees as ideal for payment use cases. This made PYUSD one of the first major stablecoins to launch natively on both Ethereum and Solana.
How PayPal USD Works
PYUSD operates as a traditional fiat-backed stablecoin with reserve-based peg maintenance, but its integration with PayPal's payment infrastructure sets it apart.
Minting and Redemption
Authorized participants can mint new PYUSD by depositing US dollars with Paxos. PYUSD is redeemed by burning tokens and receiving the equivalent US dollar value. For everyday users, PayPal handles this process seamlessly — buying PYUSD in the app deposits dollars with Paxos, and selling returns dollars to your PayPal balance.
Reserve Composition
PYUSD is fully backed by:
• US dollar deposits at insured US depository institutions • Short-term US Treasuries (direct and reverse repo) • Cash equivalents
Paxos publishes monthly attestation reports prepared by an independent accounting firm that verify the reserve value equals or exceeds all outstanding PYUSD tokens. This transparency exceeds the disclosure practices of some competing stablecoins.
Compliance Features
As a NYDFS-regulated token, PYUSD includes compliance capabilities. Paxos can freeze PYUSD at specific addresses if required by law enforcement or court orders. This distinguishes PYUSD from decentralized stablecoins like DAI, which cannot be frozen. For regulators and institutional users, this compliance capability is a feature; for privacy advocates, it is a concern.
Ethereum and Solana Deployment
PYUSD exists as an ERC-20 token on Ethereum and an SPL token on Solana. Each deployment is a separate token contract managed by Paxos. On Ethereum, PYUSD benefits from the broadest DeFi ecosystem but has higher gas fees. On Solana, transactions cost fractions of a cent and settle in under a second, making it better suited for payment use cases.
PYUSD vs USDT vs USDC
PYUSD enters an established stablecoin market. Here is how it compares to the two largest stablecoins:
| Feature | PYUSD | USDT | USDC |
|---|---|---|---|
| Issuer | Paxos Trust Company | Tether Limited | Circle |
| Backing | USD deposits, Treasuries, cash equivalents | Cash, Treasuries, loans, other assets | Cash, short-term US Treasuries |
| Freeze Capability | Yes (Paxos can freeze) | Yes (Tether can freeze) | Yes (Circle can freeze) |
| Regulator | NYDFS | None (BVI-registered) | Multiple US state regulators |
| Chains | Ethereum, Solana | Ethereum, Tron, Solana, + 10 more | Ethereum, Solana, Base, + 10 more |
| Integrated User Base | PayPal/Venmo (400M+ users) | Exchange-native (no consumer app) | Coinbase app integration |
PYUSD's competitive advantage is distribution: no other stablecoin has native integration with a payment platform used by 400M+ people. USDT dominates exchange trading pairs, and USDC leads in DeFi integration. PYUSD targets the mainstream consumer payments market — a different segment from the crypto-native audiences served by USDT and USDC.
Why PayPal USD Has Value
PYUSD maintains its value through a strict 1:1 reserve backing with US dollar-denominated assets, verified by independent monthly attestations under NYDFS oversight. Each PYUSD can be redeemed for $1 from Paxos, creating a reliable price floor. PayPal's backing and distribution give PYUSD additional credibility in the stablecoin market.
The stablecoin's unique value proposition is PayPal's distribution network. With native integration in PayPal and Venmo apps, PYUSD has access to over 400 million active users — most of whom have never used a cryptocurrency exchange or DeFi protocol. This distribution advantage could make PYUSD the first stablecoin to achieve mass consumer adoption for everyday payments.
NYDFS regulation provides institutional credibility. Unlike some stablecoins with opaque reserves, Paxos operates under strict regulatory requirements including capital reserves, consumer protection rules, and regular examinations. This makes PYUSD attractive to businesses and institutions that require regulatory clarity.
How to Buy PayPal USD
PYUSD is available through PayPal, Venmo, and major cryptocurrency exchanges. Since it is a stablecoin pegged to $1, the focus when buying is on minimizing fees.
1Compare providers
The easiest way to get PYUSD is directly through the PayPal or Venmo app. Alternatively, compare exchange fees on coinvela for purchasing PYUSD on crypto exchanges.
2Create an account
If using an exchange, sign up and complete identity verification (KYC). PayPal and Venmo users already have verified accounts.
3Fund your account
On PayPal/Venmo, buy PYUSD directly from your linked bank account or PayPal balance. On exchanges, deposit via bank transfer or crypto.
4Buy PYUSD
On PayPal/Venmo, select PYUSD and enter the amount. On exchanges, navigate to the PYUSD pair and place an order. For stablecoins, market orders at ~$1 are standard.
5Transfer or Use
PYUSD in PayPal/Venmo can be sent to other PayPal users or transferred to external Ethereum/Solana wallets. On exchanges, withdraw to a personal wallet for self-custody.
Next step: Compare PYUSD exchange fees and availability to find the best price.
How to Store PayPal USD
Wallet Types for PYUSD
PYUSD can be stored in PayPal's integrated wallet or external crypto wallets:
- • PayPal/Venmo: The simplest option. PYUSD is held in your PayPal or Venmo account with no separate wallet needed. Convenient for payments but relies on PayPal's custody.
- • Software Wallets: MetaMask (Ethereum), Phantom (Solana), or multi-chain wallets like Trust Wallet. Required for DeFi interactions.
- • Hardware Wallets: Ledger and Trezor support PYUSD as an ERC-20 token. Ledger also supports SPL tokens on Solana.
- • Exchange Wallets: Keep PYUSD on exchanges like Coinbase or Kraken for convenient trading, but at the cost of self-custody.
Hardware Wallets
For the highest security on large PYUSD holdings, use a hardware wallet like Ledger or Trezor. These keep your private keys offline while allowing you to interact with PYUSD on Ethereum. For Solana-based PYUSD, Ledger provides native support.
PayPal & Venmo Storage
The simplest way to hold PYUSD is within your PayPal or Venmo account. Your PYUSD is stored in PayPal's custodial wallet with no additional setup required. However, you don't control the private keys, and you're limited to PayPal's supported features for transfers and usage.
Protect Your Seed Phrase
If storing PYUSD in a self-custody wallet (not PayPal), write down your seed phrase on paper and store it in a secure location. Never share it online. Losing access to your seed phrase means losing access to your PYUSD permanently — PayPal cannot recover tokens sent to external wallets.
How to Use PayPal USD (PYUSD)
Merchant Payments
PayPal's 'Checkout with Crypto' feature allows PYUSD holders to pay at millions of merchants that accept PayPal. PYUSD is converted to USD at checkout, so merchants receive dollars without needing to handle cryptocurrency directly.
DeFi Protocols
On Ethereum and Solana, PYUSD can be used in decentralized finance protocols for lending, borrowing, liquidity provision, and trading. Major DeFi platforms on both chains have integrated PYUSD as a supported stablecoin.
Person-to-Person Payments
PYUSD enables instant, fee-free transfers between PayPal and Venmo users. You can send PYUSD to anyone with a PayPal account — they receive stable dollar value without needing to understand crypto. This makes PYUSD one of the most accessible stablecoins for everyday peer-to-peer payments.
Cross-Border Transfers
PYUSD can be transferred internationally using the underlying blockchain, bypassing traditional wire transfer fees and delays. On Solana, transfers settle in under a second for fractions of a cent — significantly faster and cheaper than traditional remittance services.
Risks
PYUSD carries risks including: centralization risk (Paxos can freeze tokens), platform dependency on PayPal, regulatory risk (changing stablecoin regulations could affect PYUSD), and the relative newness of the token compared to USDT and USDC.
Unlike decentralized stablecoins, PYUSD can be frozen at individual addresses by its issuer, which may be a concern for users who value censorship resistance.
Notable People Behind PYUSD
PYUSD was created through the partnership between PayPal and Paxos. Key figures include:
Dan Schulman
Former CEO of PayPal (2015-2023) who initiated PayPal's crypto strategy. Under Schulman's leadership, PayPal enabled crypto buying in 2020, launched 'Checkout with Crypto,' and greenlit the PYUSD stablecoin project. His vision was to make cryptocurrency accessible to PayPal's hundreds of millions of users.
Charles Cascarilla
Co-founder and CEO of Paxos Trust Company, the issuer of PYUSD. Cascarilla built Paxos into one of the most regulated crypto infrastructure companies, previously issuing BUSD for Binance and Pax Dollar (USDP). His focus on regulatory compliance made Paxos the natural partner for PayPal's stablecoin.
Alex Chriss
CEO of PayPal since September 2023. Chriss has continued PayPal's crypto strategy, overseeing the expansion of PYUSD to Solana and driving deeper integration of cryptocurrency features across the PayPal and Venmo platforms.
Regulation Overview for PayPal USD
Regulatory Framework
PYUSD is one of the most explicitly regulated stablecoins in the market. Paxos Trust Company is chartered under New York banking law and supervised by the NYDFS, which requires strict capital reserves, consumer protection measures, and regular examinations. This regulatory framework provides PYUSD with a level of oversight that exceeds most competing stablecoins.
Regulation by Country
PYUSD's regulatory treatment varies by jurisdiction:
United States: PYUSD is issued under NYDFS oversight, making it one of the most regulated stablecoins available to US users. PayPal is also registered as a money transmitter in applicable states. PYUSD is treated as property for US tax purposes.
Canada: PYUSD is available to Canadian users through exchanges and potentially through PayPal (subject to Canadian regulatory approval). Canadian exchanges listing PYUSD must be registered with provincial securities regulators and FINTRAC.
European Union: The EU's MiCA regulation provides a framework for stablecoins. PYUSD's availability in the EU depends on Paxos and PayPal meeting MiCA compliance requirements, which are being phased in through 2025.
Australia: PYUSD is accessible on international exchanges serving Australian users. AUSTRAC oversees crypto exchange registration and compliance. PayPal operates in Australia but PYUSD availability may vary based on local regulatory requirements.
PYUSD's NYDFS regulation provides a strong compliance foundation, but stablecoin regulations continue to evolve globally. Users should verify PYUSD availability and legal status in their jurisdiction.
Reserve Attestations
Paxos publishes monthly attestation reports prepared by an independent accounting firm that verify PYUSD reserves equal or exceed all outstanding tokens. These reports are publicly available and provide transparency into reserve composition. This attestation practice is mandated by NYDFS as a condition of Paxos's trust company charter.
FAQs About PayPal USD (PYUSD)
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