PYUSD: A New Bridge Connecting TradFi and Crypto Assets

In the wave of digitalization, TradFi and Crypto Assets have become the focus, but there seems to be a gap between the two. Today, the emerging stablecoin PYUSD is bridging this gap, becoming a solid link between TradFi and Crypto Assets.

As the first compliant stablecoin issued by a non-encryption company, the emergence of PYUSD holds significant symbolic meaning. It represents the traditional financial industry's further exploration of Crypto Assets, and also signifies a notable shift in the attitude of enterprises towards stablecoins, indicating a gradual increase in the acceptance of regulatory policies. In the future, this change will further promote the integration process of Web3, TradFi, and the real world. PYUSD will play an important role as a connecting bridge.

PYUSD may become America's "digital dollar"

Recently, a payment platform announced the launch of the PYUSD stablecoin, becoming the first mainstream financial services company to adopt Crypto Assets for payments and transfers. The value of PYUSD is pegged 1:1 to the USD, backed by cash deposits, U.S. short-term government bonds, and other equivalent cash reserves.

The goal of PYUSD is to enable instant conversion to USD while also being exchangeable for other crypto assets available on the platform's network. The platform plans to integrate PYUSD into its payment application, allowing users to freely send and receive tokens between different wallets. As an ERC-20 token based on the Ethereum blockchain, PYUSD can also be transferred to compatible third-party wallets, providing users with a wider range of options and flexibility.

To ensure the stability and functionality of PYUSD, the platform will first conduct payment tests among institutions before opening to U.S. users. In the future, eligible U.S. customers will enjoy the following benefits:

• Transfer PYUSD between the platform and compatible external wallets
• Use PYUSD for person-to-person payments
• Choose to pay with PYUSD at checkout.
• Supports the conversion of any Crypto Assets to PYUSD.
• Buying, selling, holding PYUSD or transferring it to eligible US balance accounts is free of charge.

In addition, to increase transparency and trust, starting in September, PYUSD will publish a public monthly reserve report detailing the assets that make up its reserves. An independent third-party accounting firm will also be commissioned to publicly verify the value of the PYUSD reserve assets in accordance with the standards of the American Institute of Certified Public Accountants, ensuring accuracy and reliability.

It is worth noting that PYUSD and its reserve assets will be strictly regulated by the New York Department of Financial Services, and even in the event of the issuer's bankruptcy, customer assets will not be used to repay its liabilities. This sets PYUSD apart from most stablecoins currently available.

According to future plans, PYUSD will first launch on its payment application. This move has significant strategic importance, as the platform has 430 million active users globally. The launch of PYUSD can rapidly expand the user base in a short time, and the leading advantages of online payment globally lay a solid foundation for the worldwide promotion of PYUSD. At the same time, the global commercial cooperation network will also bring PYUSD into more application scenarios, and PYUSD may become a universally accepted "digital dollar," widely used in daily consumption through the payment network.

Launch of PYUSD Stablecoin: Building the Future of Web3 Business Scenarios

The stablecoin program of the platform has long been in preparation, but progress has been slow due to regulatory policy impacts. According to public information, PYUSD was minted as early as November 2022 with 1.1 million coins and multiple small transfer tests were conducted. On February 1, 2023, another 26.4 million coins were minted, but on February 23, 25.5 million PYUSD were destroyed.

The incident arose from the investigation by the U.S. Securities and Exchange Commission into the stablecoin issued by the publisher in collaboration with a certain exchange. The SEC believes that the publisher is suspected of issuing securities without registration. Subsequently, the New York State Department of Financial Services supervised the publisher and required them to stop minting the stablecoin. This not only affected the parties involved but also led to the temporary suspension of the PYUSD issuance plan. It was not until August 7 that the announcement to launch PYUSD was made.

Choosing the timing to launch the PYUSD stablecoin is clever. As places like Singapore and Hong Kong actively embrace Web3 and reap its benefits, there are also signs of a shift in attitude within the U.S. political landscape, aiming to keep pace with the times and embrace digital assets. This trend can be seen from multiple events. Changes in the regulatory environment often determine the fate of the industry, and the compliance path of PYUSD also highlights the shift in U.S. regulatory policy towards stablecoins.

It is worth mentioning that the issuance of stablecoins is not the platform's first foray into the encryption field. As early as 2014, it opened up Bitcoin payment functionality through cooperation with cryptocurrency exchanges. It has been exploring the crypto industry for many years. Currently, it has fully implemented functions to support the purchase, holding, selling, and transfer of mainstream crypto assets. In addition to creating products and services that enhance the practicality of digital currencies, it is also committed to improving consumers' and merchants' understanding of crypto assets, stablecoins, and central bank digital currencies, and providing educational content to help users understand relevant knowledge and risks.

Clearly, the platform's purpose in doing this is not only to issue stablecoins; stablecoins are just the foundation for achieving a larger goal. As a compliant USD stablecoin, PYUSD has the dual advantages of network payment and on-chain support. Combined with a large user base, market influence, and business cooperation network, the use of PYUSD will surpass the traditional stablecoin category, having a broader range of application scenarios. Some traditional online payment scenarios can be moved on-chain, such as cross-border transactions and remittances. At the same time, by leveraging the on-chain payment advantages of PYUSD, it can rebuild the Web2 world business scenarios in Web3, showcasing new advantages. It can be said that PYUSD will become an important tool for building Web3 business scenarios in the future.

PYUSD will bring changes to the Crypto Assets industry

The launch of PYUSD not only plays an important role in the platform's Web3 strategy, but also has a profound impact on the entire Crypto Assets industry, mainly reflected in the following aspects:

reignite the stablecoin war

In the stablecoin market, USDT and USDC have always dominated. According to data, USDT currently ranks first with a market share of 67.2%, followed closely by USDC at 20.6%. Meanwhile, a jointly issued stablecoin only has a market share of 2.8%, ranking fourth. However, with the strong entry of PYUSD, the stablecoin market may welcome new competition.

Currently, a certain stablecoin is facing its greatest challenge due to regulatory requirements to suspend the minting of new coins. Since PYUSD is issued by the same issuer, once PYUSD is successfully launched, it may quickly replace its market position. The next affected is USDC, as PYUSD and USDC share a similar customer base, and this segment of customers tends to prefer stablecoins regulated in the United States. Relatively speaking, the one currently least affected may be USDT. Reportedly, its CTO stated that the launch of PYUSD would not impact it, as PYUSD only provides services in the United States, while it does not offer services in the United States.

However, in order for PYUSD to be competitive in the stablecoin market, the primary condition is that it must be listed on exchanges for trading to leverage its advantages. It has been confirmed that a certain exchange will be the first to list PYUSD. Once conditions such as liquidity are mature, trading will commence immediately, and an announcement will be made to users. Users need to be patient and closely monitor relevant announcements.

has triggered the traditional industry to enter the stablecoin craze.

The platform's entry into the stablecoin market may have higher strategic goals, but profitability is undoubtedly the primary consideration. Are stablecoins profitable? The answer is certainly yes; in fact, they are very lucrative. Stablecoin issuers have large cash reserves and do not need to pay interest to customers, making a huge profit simply through the issuance of stablecoins. It is reported that the number one stablecoin issuer achieved a net profit of $1.48 billion in just the first quarter of this year, with a staff size of only over 50 people.

In the past, issuing stablecoins could face regulatory pressure. However, the successful issuance of PYUSD undoubtedly allows more traditional financial institutions to see opportunities. The platform's collaboration with issuers to launch stablecoin models represents a significant step from mainstream finance towards Crypto Assets and blockchain technology. It is reported that several institutions are actively exploring the possibility of incorporating stablecoins into their product lines. If there is no significant opposition in the market, they will quickly enter this field, which will undoubtedly trigger a new wave of stablecoin enthusiasm.

Accelerate the spread of Crypto Assets

The platform's actions play an important role in promoting the adoption of Crypto Assets. By launching PYUSD on payment applications, it opens up the possibility of using stablecoins for everyday transactions. This means that 430 million users have the opportunity to choose PYUSD as their daily settlement currency. They can enjoy convenient cross-border settlements and zero transaction fees. This is beneficial for users and also helps promote the development of Crypto Assets as a legitimate payment method, facilitating broader acceptance.

In the past, the only way to obtain stablecoins was through crypto companies. However, with PYUSD entering the market, millions of users can access the crypto world through widely used payment platforms. This provides ordinary users with a more convenient and secure way to participate in the application and development of encryption technology.

This platform's initiative not only opens the door to the encryption field for traditional financial institutions but also creates a more user-friendly and accessible entry point for ordinary users. By launching PYUSD and integrating it into the payment platform, it provides strong support for the popularization and application of Crypto Assets. This initiative not only helps promote the development of encryption technology but also further drives the acceptance of Crypto Assets globally.

Promote the formulation of regulatory policies

At the end of July 2023, the U.S. House Financial Services Committee reviewed and passed the "Payments Stablecoin Clarity Act." The purpose of this act is to provide a clear regulatory framework for stablecoins, establishing uniform standards to protect American investors and consumers. However, the act faced opposition from the Federal Reserve and the U.S. Department of the Treasury. Democrats believe there are serious issues that are detrimental to the United States. As of now, Congress has not passed the stablecoin act, and various parties are still in negotiation.

Against this backdrop, the launch of PYUSD and the resulting wave of stablecoins may prompt Congress to quickly pass stablecoin legislation. The introduction of PYUSD brings urgency to regulatory policies. As the largest payment platform in the United States, the launch of PYUSD means that in the future, potentially hundreds of millions of users may enter the crypto market through this platform. This large user base may pose risks of money laundering and capital flight. In this situation, the government and regulatory agencies will have to pay closer attention to the stablecoin industry and quickly implement corresponding regulatory policies to balance innovation and risk.