PayPal has partnered with Anchorage Digital to introduce a new rewards program for clients holding its USD stablecoin, PYUSD. Clients using Anchorage’s services or the Porto institutional self-custody wallet to manage their PYUSD assets will benefit from this program.
Rewards Program Details
Anchorage confirms that PYUSD remains fully accessible and segregated in participants’ accounts on-chain, ensuring quick access. Importantly, clients can earn rewards without involving rehypothecation, staking, or lending.
PYUSD Backed 1:1 by US Dollars
PayPal introduced PYUSD in 2023 as an ERC-20 token on the Ethereum blockchain. Paxos Trust Company, a regulated crypto custodian in the US, issues the stablecoin, which is fully backed by US dollars. PYUSD aims to compete with prominent dollar-backed stablecoins like USD Coin from Circle Internet Financial.
Integration and Utility of PYUSD
PYUSD stands out due to its compatibility with various external developers, wallets, and web3 applications. This broad integration enhances its functionality and appeal in the digital economy. Stablecoins like PYUSD are increasingly popular for global transactions because of their programmability, easy transfer, and self-custody options.
Growth and Custody Innovations
The rise of regulated digital asset custodians in the US is evident through Anchorage Digital. In addition to launching this rewards program, Anchorage introduced Porto earlier this year. Porto is a self-custody solution tailored for institutional clients, including venture funds and sovereign wealth funds. Other institutions are also expanding in this space. For example, Coinbase offers about a 5.2% annual yield on USDC holdings through its institutional custody service. Recently, Fireblocks received approval from New York’s financial regulator to custody assets for US clients.
PayPal’s PYUSD on Solana
Recent reports show that the supply of PayPal’s PYUSD on the Solana blockchain has surpassed its supply on Ethereum. This growth results from PYUSD’s integration into decentralized exchanges such as Jupiter and Orca, where it is included in liquidity pools. Consequently, PYUSD has established a strong presence on Solana alongside major stablecoins like USDC and USDT.
Features and Compliance on Solana
PYUSD on Solana includes a feature called “confidential transfers,” which enhances user privacy while maintaining regulatory transparency. Moreover, the Solana token extension standard, adhering to the SPL token standard, provides several benefits for PYUSD. These benefits include reduced development efforts, enterprise-ready capabilities, and increased flexibility.
Regulatory Landscape and Future Developments
The stablecoin market, now valued at over $140 billion, remains largely unregulated. Recently, Senators Cynthia Lummis and Kirsten Gillibrand proposed new legislation to regulate stablecoins. This bill would impose reserve and operational requirements on payment stablecoin issuers, including the creation of subsidiaries dedicated to issuing stablecoins.
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