Recent reports have revealed that PayPal is set to launch its own stablecoin called PayPal USD (PYUSD), which is pegged to the U.S. dollar and based on Ethereum.

PayPal drops breaking news

This move marks the company’s entry into the cryptocurrency market.

As the first major financial company to issue its own stablecoin, PayPal users in the U.S. will soon be able to transfer PYUSD between their PayPal account and supported external wallets, make purchases, and convert it to and from other supported cryptocurrencies.

The stablecoin will also be available to a large and growing community of external developers, wallets, and web3 applications, and can be easily adopted by crypto exchanges.

PYUSD is a stablecoin issued by Paxos Trust, a crypto financial services company based in New York.

It is fully backed by deposits in U.S. dollars, short-term Treasuries, and other similar cash equivalents and can be redeemed for dollars at any time.

It can also be exchanged for other cryptocurrencies like bitcoin (BTC), bitcoin cash (BCH), ether (ETH), and litecoin (LTC) on the PayPal network.

According to Bloomberg, PayPal suspended development on its stablecoin project in February.

“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” said Dan Schulman, president and CEO of PayPal, in a press statement.

“Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”

PYUSD will be first available on PayPal and then its popular Venmo app.

“This announcement is a clear signal that stablecoins—if issued under a clear regulatory framework—hold promise as a pillar of our 21st century payments system,” said Rep. Patrick McHenry (R-N.C.), chair of the House Financial Services Committee, in a statement.

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