PYUSD: A Bridge Connecting TradFi and Crypto Assets

In the wave of the digital age, traditional finance and crypto assets have become the focus of people's attention. However, there seems to be an invisible divide between these two fields. Now, an emerging stablecoin named PYUSD is rapidly bridging this gap, becoming a solid bridge connecting traditional finance 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, while also indicating a significant shift in corporate attitudes toward stablecoins, signaling that the acceptance of regulatory policies is gradually increasing. 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 bridge connecting them.

PYUSD: The Prototype of America's "Digital Dollar"

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

The goal of PYUSD is to be redeemable for USD at any time, while also being convertible to other crypto assets provided on the platform's network. To achieve this, 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 third-party wallets that are compatible with the platform, 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, and then quickly open to U.S. users. In the future, eligible U.S. customers will enjoy the following benefits:

• Transfer PYUSD between this platform and compatible external wallets.
• Use PYUSD for person-to-person payments
• Choose to pay with PYUSD at checkout.
• Convert any Crypto Assets supported by the platform to PYUSD.
• Purchasing, selling, holding PYUSD or transferring PYUSD to a qualifying U.S. balance account incurs no fees.

In addition, to increase transparency and trust, starting in September, PYUSD plans to release a public monthly reserve report detailing the assets that make up its reserves. The platform will also engage an independent third-party accounting firm to publicly verify the value of PYUSD reserve assets, in accordance with the attestation standards set by the American Institute of Certified Public Accountants (AICPA), to ensure their accuracy and reliability.

It is worth noting that PYUSD and its reserve assets will be subject to strict regulation by the New York Department of Financial Services (NYDFS), and customer assets will not be used to repay liabilities even in the event of the issuer's bankruptcy. This positions PYUSD ahead of existing stablecoins.

According to the platform's future plans, PYUSD will first be launched on its payment application. This move is of significant strategic importance, as the platform has 430 million active users globally, and the launch of PYUSD can rapidly expand its user base in a short period. At the same time, the platform's leading online payment advantages provide a solid foundation for the global promotion of PYUSD. The platform's extensive global business partnership network will also bring PYUSD into more application scenarios, making PYUSD potentially a globally accepted "digital dollar," widely used in daily consumption through the platform's payment network.

PYUSD Stablecoin: Building the Future of Web3 Business Scenarios

The platform's stablecoin plan began preparations a long time ago, but progress has been relatively slow due to regulatory policies. According to public information, PYUSD was minted in November 2022 with 1.1 million coins and conducted several small transfer tests. Subsequently, on February 1, 2023, an additional 26.4 million coins were minted. However, on February 23, the PYUSD issuer destroyed 25.5 million PYUSD.

The cause of this incident was that a certain stablecoin was under investigation by the U.S. Securities and Exchange Commission (SEC). The SEC believed that its issuer was suspected of issuing securities without registration. Subsequently, the New York State Department of Financial Services (NYDFS) supervised the issuer and required it to stop minting the certain stablecoin. This not only affected the parties involved but also led to the temporary suspension of discussions between the platform and the issuer regarding the issuance of PYUSD. Until August 7th, the platform announced the launch of the stablecoin PYUSD.

The platform's timing to release the PYUSD stablecoin is very clever. After actively embracing Web3 and gaining many benefits in places like Singapore and Hong Kong, the attitude of the U.S. political scene also shows signs of change, intending to keep pace with the times and embrace digital assets. This trend can be seen from events such as a certain asset management giant applying for a Bitcoin ETF and a court ruling that a certain cryptocurrency is not a security. Changes in the regulatory environment often determine the fate of an industry, and the compliance path of PYUSD also highlights the shift in U.S. regulatory policies regarding stablecoins.

It is worth mentioning that the issuance of stablecoins is not the platform's first foray into the cryptocurrency space. As early as 2014, the platform enabled Bitcoin payment functionality through partnerships with cryptocurrency exchanges. Over the years, the platform has continuously explored the cryptocurrency industry. As of now, the platform has fully implemented features that support the purchase, holding, selling, and transfer of mainstream crypto assets. In addition to creating products and services that enhance the utility of digital currencies, the platform is also committed to improving consumer and merchant understanding of crypto assets, stablecoins, and central bank digital currencies (CBDC), and helps users understand related knowledge and risks by providing educational content.

The platform's purpose is clearly not just to issue stablecoins; stablecoins are merely the foundation for achieving larger goals. As a compliant USD stablecoin, PYUSD possesses the dual advantages of network payment and on-chain support. Combined with the platform's vast user base, market influence, and business collaboration network, PYUSD's applications will transcend traditional stablecoin categories, having a broader range of use cases. The platform can transfer some traditional online payment scenarios onto the blockchain, such as cross-border transactions and remittances. At the same time, leveraging PYUSD's advantages in on-chain payments, it can reconstruct Web2 commercial scenarios in the Web3 space and unleash new advantages. It can be said that PYUSD will become an important tool for the platform to build Web3 commercial scenarios in the future.

The Impact of PYUSD on the Crypto Industry

The launch of PYUSD plays an important role in the platform's Web3 strategy and has also had a profound impact on the entire encryption industry, mainly reflected in the following aspects:

Reigniting the Battle of Stablecoins

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

Currently, a certain stablecoin is facing its biggest challenge as regulators demand it to suspend the minting of new coins. Since PYUSD is issued by the same publisher as this stablecoin, once PYUSD is successfully launched, it has the potential to quickly replace this stablecoin's position in the market. The next one affected is USDC, as PYUSD shares a similar customer base with USDC, and this segment of customers tends to prefer using US-regulated stablecoins over offshore stablecoins. Relatively speaking, the one least affected currently may be USDT. According to reports, a certain technology leader stated that the launch of PYUSD will not impact them, as PYUSD only provides services in the United States, while they do not offer services in the U.S.

However, for PYUSD to be competitive in the stablecoin market, the primary condition is that PYUSD must be listed on exchanges for trading to leverage its advantages. Currently, there is confirmation that a certain exchange has announced it will be the first exchange to list the PYUSD stablecoin. Once conditions such as liquidity are met, the exchange will immediately open trading and notify users through an announcement. Users need to be patient and closely monitor related announcements.

has triggered a wave of interest in stablecoins in traditional industries.

The platform's entry into the stablecoin market may have higher strategic goals, but making money is undoubtedly its primary consideration. So, are stablecoins profitable? The answer is yes, in fact, they are very profitable. Stablecoin issuers have large cash reserves and do not need to pay interest to customers, allowing them to earn a significant profit simply through the issuance of stablecoins. It is reported that the leading stablecoin company achieved a net profit of 1.48 billion USD in the first quarter of this year, while the company's workforce consists of only a little over 50 people.

In the past, the issuance of stablecoins may have faced regulatory pressures. However, the successful issuance of the PYUSD stablecoin undoubtedly provides more opportunities for traditional financial institutions. The model of collaborating with issuers to issue stablecoins represents an important step for mainstream finance into crypto assets and blockchain technology. It is reported that several payment giants are actively exploring the possibility of incorporating stablecoins into their product lines. If there are no significant opposing voices in the market, they will quickly enter this field, which will undoubtedly trigger a new wave of stablecoin enthusiasm.

Accelerating the adoption of Crypto Assets

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

In the past, the only way to obtain stablecoins was through encryption companies such as certain exchanges. However, with PYUSD entering the market, millions of users can enter the Crypto Assets world by using one of the widely used payment platforms globally. This will provide ordinary users with a more convenient and secure way to participate in the application and development of encryption technology.

The platform's initiative not only opens a door to the encryption field for traditional financial institutions but also creates a more friendly and accessible entry point for ordinary users. By launching the PYUSD stablecoin and integrating it into the payment platform, the platform 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 "Payment Stablecoin Clarity (Transparency) Act." The purpose of this bill is to provide a clear regulatory framework for stablecoins, aiming to protect U.S. investors and consumers by establishing unified standards. However, the bill has faced opposition from the Federal Reserve and the U.S. Department of the Treasury. Some Democrats believe that the bill has serious issues and is detrimental to the U.S. As of now, Congress has not yet passed the stablecoin bill, and various institutions are still in a state of negotiation.

In this context, the launch of PYUSD and the resulting wave of stablecoins may drive Congress to pass stablecoin legislation more quickly. The launch of PYUSD has created a sense of urgency for regulatory policies. As the largest payment platform in the United States, the platform's introduction of PYUSD means that in the future, hundreds of millions of users may potentially transact through.