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- PayPal’s stablecoin (PYUSD) has been listed on Coinbase after the likes of Kraken, ByBit, Huobi, and Crypto.com made it available for trading.
- Unfortunately, the last couple of months have been difficult for the asset class as the market cap of stablecoins declined for the 17th consecutive month.
The stablecoin dominance of Tether’s USDT, Stellar’s (XLM), and Circle’s USDC is currently under threat with the introduction of PayPal’s stablecoin (PYUSD) into the market. Its adoption is fast spreading as Coinbase announces support for it. According to reports, PYUSD is a U.S. dollar-pegged stablecoin that maintains 1:1 with the fiat currency. Earlier this week, PayPal disclosed that the asset is backed by secure and highly liquid assets.
Today, we’re unveiling a new stablecoin, PayPal USD (PYUSD). It’s designed for payments and is backed by highly liquid and secure assets. Starting today and rolling out in the next few weeks, you’ll be able to buy, sell, hold, and transfer PYUSD.
More on PYUSD
The custody and the issuance of the asset will be the responsibility of the blockchain-focused firm Paxos Trust Company. So far, the likes of Kraken, ByBit, Huobi, and Crypto.com have all announced support for PYUSD. On Coinbase, the stablecoin has been classified under its “Experimental Label” to indicate that it is riskier and a lower liquidity token. On the PayPal app, customers can buy and sell PYUSD and even exchange it for other crypto assets like Bitcoin.
In the wake of this development, North Carolina Congressman Patrick McHenry, the Chairman of the House Financial Services Committee, has called for the need to introduce a regulatory framework for stablecoins.
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. Clear regulations and robust consumer protections are essential to enabling stablecoins to achieve their full potential. That’s why it’s more important than ever that Congress enact legislation to provide comprehensive digital asset regulation, especially for stablecoins.
Stablecoin Ecosystem Struggles
The Coinbase listings come at the point stablecoins experience a market cap dip with USDT declining for the first time in nine months. In August alone, its market cap fell by $82.9 million, representing 1.2 percent according to Bloomberg citing CCData. Regardless of this, USDT still has a substantial lead over USDC. In general, the stablecoin market recorded a fall for the 17th consecutive month, falling by 0.4 percent and losing $125 billion. On top of this, trading volume also saw a considerable decline.
The reasons have been linked to tighter regulatory scrutiny, rising interest rates, as well as the fading investors’ enthusiasm caused by the long period of bearish run. On August 29, the total market cap of stablecoins fell to $123 billion before bouncing back.
According to Bloomberg, the decline is not entirely linked to the reduced trading activities on centralized exchanges. The reason is that there was a general decline in activities in the Decentralized Finance sector.
It is also important to understand that there has been a notable shift in the stablecoin ecosystem recently. It can be recalled that USDC relinquished almost half of its share due to the struggle of its reserve holder Silicon Valley Bank. The US regulatory scrutiny is also pushing BUSD out of the market while other external factors are creating a hostile environment that impedes the growth of the asset class. Regardless, the recent court rulings in cases involving crypto-related companies are restoring confidence in the market.
