PayPal is Actively Exploring a Stablecoin, CEO Interested in DeFi
Giant payments firm PayPal has confirmed its plans of researching the launch of a stablecoin backed by the US dollar. Prior to this, Dan Schulman, CEO of PayPal, had noted interest in smart contracts, digitizing assets, and even decentralized finance (DeFi).
PayPal is Developing its Own Stablecoin
PayPal is reportedly exploring the development of a stablecoin as part of its cryptocurrency push, according to a report by Bloomberg. The company confirmed the move after evidence of the development of a stablecoin was discovered in PayPal’s app by developer Steve Moser.
The evidence included code and images suggesting that the company is working on what is dubbed a “PayPal Coin.” Jose Fernandez da Ponte, senior vice president of crypto and digital currencies at PayPal, confirmed the news, saying:
“We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators.”
Further detailing the hidden codes referring to PayPal Coin, a spokeswoman said that they belong to a recent internal hackathon, which is an activity where programmers, designers, and the other team members discuss and explore new products that may never see a public release. This suggests that plans are not yet final.
In mid-November, on the Unchained podcast, da Ponte claimed that he has not seen “a stablecoin out there that is purpose-built for payments.” He added that a stablecoin should be able to support a huge volume of payments while ensuring the security of the network.
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PayPal Aims to Help Shape the ‘Next Generation of the Financial System’
It is no secret that PayPal is exceptionally interested in further expanding its crypto products. In late July 2021, during PayPal’s Q2 earnings call, Dan Schulman unveiled the company’s plans to support crypto payment options in the UK. Just one month later, the company expanded its crypto offering to the UK.
Within that earnings call, Schulman also pointed out that the company was “clearly thinking about what the next generation of the financial system looks like, how [PayPal] can help shape that.” He added:
“How can we use smart contracts more efficiently? How can we digitize assets and open those up to consumers that may not have had access to that before? There are some interesting DeFi applications as well. And so we are working really hard.”
This suggested that the payments giant was planning to directly engage with the burgeoning DeFi market. While Schulman didn’t elaborate on DeFi plans, he made it clear that they would be thinking of ways to integrate with DeFi.
Now, the firm’s stablecoin move further increases the possibility of an expansion into DeFi. After all, stablecoins are a crucial aspect of DeFi as they allow investors to alleviate the potential negative effects of volatility while also enabling them to generate yield and earn double-digit interest rates on their loans.
Furthermore, stablecoins are known as a bridge between traditional finance and crypto adoption. This is because the majority of mainstream users are not fond of volatility, which is what keeps them from entering the space. A stablecoin creates an on-ramp, allowing investors and traders to find stability without cashing out of crypto altogether and moving to fiat currency.
Do you think PayPal will integrate DeFi applications sometime in the future? Let us know in the comments below.