PayPal unveils PYUSD Stablecoin, faces surge in counterfeit tokens: Know more

California-based PayPal, a financial technology company, announced on Monday, August 7, that it has introduced a regulated stablecoin that has the potential to revolutionise payments within web3 and digitally native ecosystems. 

Dubbed PayPal USD (PYUSD), the stablecoin aims to bridge the gap between traditional financial systems and the emerging world of blockchain and cryptocurrencies.

PayPal USD

PayPal USD is designed to contribute to the opportunity stablecoins offer for payments and is 100 per cent backed by U.S. dollar deposits, short-term US Treasuries, and similar cash equivalents. 

PayPal USD is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company.  

Commencing its rollout, with a gradual expansion planned over the forthcoming weeks, PayPal is granting eligible U.S. customers the opportunity to:

• Transfer PayPal USD between PayPal and compatible external wallets.
• Conduct person-to-person transactions using PYUSD.
• Utilise PayPal USD for purchases by selecting it at checkout.
• Seamlessly convert between PayPal’s supported cryptocurrencies and PayPal’s USD.

“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,” says Dan Schulman, president and CEO of PayPal. 

“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,” adds Schulman.

Will be available to consumers, merchants, and developers

PayPal USD will be available to consumers, merchants, and developers to seamlessly connect fiat and digital currencies. 

As an ERC-20 token issued on the Ethereum blockchain, PayPal USD will be available to an already large and growing community of external developers, wallets, and web3 applications, can be easily adopted by exchanges, and will be deployed to power experiences within the PayPal ecosystem.   

Most of the current volume of stablecoins is used in web3-specific environments. PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo. 

Beginning in September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves. 

Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets.

The attestation will be issued by an independent third-party accounting firm and conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA). 

Fake PYUSD tokens on surge

Ever since PayPal introduced its latest stablecoin, there has been a surge in opportunistic individuals, speculative traders, and potentially fraudulent actors attempting to leverage the excitement by launching their imitation tokens.

As per data obtained from DEX Screener, a decentralised exchange scanner, numerous new token pairs labelled as “PYUSD” have emerged within hours following the initial announcement.

These mimic tokens have been generated across different blockchain networks, including BNB Smart Chain, Ethereum, and Coinbase’s recently introduced layer 2 solution, Base.

The US fintech company made it explicitly clear that transfers of PayPal USD are restricted to verified PayPal accounts and compatible wallets, significantly diminishing the possibility that any of the tokens listed under the same name on platforms like UniSwap or other decentralised exchanges are genuine.

Among the imitative PYUSD tokens, the most notable one originating on the Ethereum network, has achieved an astonishing trading volume of $2.6 million immediately following PayPal’s stablecoin announcement, reports Cointelegraph.

Despite its initial surge of over 30,000% in the initial eight hours, this token’s value has subsequently dropped by more than 66% from its peak.

Many of these counterfeit PYUSD tokens are likely designed as “honeypots,” a term used to describe tokens that trap investors – once purchased, the holders are unable to sell, resulting in the loss of their cryptocurrency investments. 

Unless investors possess the ability to personally audit smart contracts, they often remain unaware of the honeypot nature until they attempt to offload their holdings.