PayPal became the first online payment giant to enter the cryptocurrency arena on Monday by rolling out a stablecoin pegged to the U.S. dollar, sending its shares up nearly 3% despite a turbulent crypto market and as PayPal’s stock dipped to a six-year low in the wake of decreased consumer spending last year.
- Shares of the San Francisco Bay-area company rose to over $64 by Monday afternoon, helping to recover from a three-month low.
- The stablecoin, called PayPal USD (PYUSD), is issued by Paxos Trust Co. and backed by dollar deposits, U.S. treasuries and cash equivalents, and is designed to maintain a value of exactly $1, according to a statement from the company released Monday morning, as CEO Dan Schulman looks to make crypto “part of the overall payments infrastructure,” Bloomberg reported.
- According to the company, users can buy, sell, keep or transfer the stablecoin directly on its mobile app or by using its website and can send it as payment on PayPal to friends without incurring any fees.
- PayPal users can also convert PayPal USD to other cryptocurrencies on the site and can send PayPal USD to digital wallet addresses through the cryptocurrency Ethereum.
Before Monday’s rise on Wall Street, Paypal’s performance on the tech-heavy Nasdaq 100 Index had been the sixth-worst over the past 12 months, falling more than 33% from nearly $97 to just over $63 on Monday morning, as the company’s revenue and profit forecasts dipped in the wake of high inflation, which the company blamed for decreased consumer spending.
Paypal’s stock had also been the ninth-worst performer year-to-date, falling nearly 12%.
Stablecoin has been seen as a reliable alternative to historically volatile cryptocurrencies, which have taken rollercoaster-style swings in recent years.
Bitcoin, crypto’s so-called gold standard, reached an all-time peak of more than $64,400 in November 2021, but has since crumbled, dipping below $20,000 last August and hitting a two-year low two months later on the heels of a pessimistic inflation report as recession fears mounted—though it has rebounded to $28,977.
Ethereum, the second-largest cryptocurrency, took a similar rise in 2021 before a sudden fall last year amid speculation of a dreaded downturn called “crypto winter”—it has since stabilized at more than $1,827, though far from its late 2021 peak of nearly $4,645.
This article was first published on forbes.com and all figures are in USD.