According to a developer called Steve Moser, references about “PayPal Coin” were found within PayPal’s app on iOS. Its logo is much like the original one but with two horizontal lines — a clear reference of the two vertical lines that are present on Bitcoin’s logo but with round edges.
Bloomberg reached out to the company to ask for more details about the leak. Fernandez da Ponte answered the journal that they are indeed “exploring” a stablecoin.
PayPal Likes Crypto
In late 2020, PayPal started to facilitate purchases of some cryptocurrencies. You can even use some to buy stuff on the internet through the app.
PayPal currently supports Bitcoin, Bitcoin Cash, Ethereum, and Litecoin on its platform. However, according to Moser, there’s a real chance that the company will soon add Neo’s support as well.
What is a stablecoin?
Different from regular cryptocurrencies, stablecoins’ value is directly backed by another asset. Tether (USDT), for example, is (supposedly) backed by American dollars in 1:1 proportion; thus, 1 USDT has the same value as 1 USD.
Long story short, stablecoins are out there as an option to avoid crypto’s strong volatility. You can enjoy the same fast and cheap transactions as other cryptocurrencies, but with the comfort of a low-volatility asset.
How does that affect the crypto market?
Now that’s something somewhat polemic. Some governments think that stablecoins (especially their own) are the answer to making the population avoid decentralized assets. On the other hand, they can be used as a “safe haven” for users, to avoid critical moments.
Cryptocurrencies and stablecoins can easily coexist, as the market isn’t mature yet to avoid aggressive volatility by itself — and since there’s no governmental control over crypto, all is up to its users.
However, Tether may face some solvency issues since not all their USDT is backed on real U.S. Dollars. A considerable amount of them is backed by commercial papers — a form of short-term company debt.
There are other stablecoins’ projects that aim to break the USDT’s dominance, like USD Coin (USDC), Binance USD (BUSD), True USD (TUSD), DAI, etc.
What are the regulators doing?
Some governments are certainly worried about stablecoins. After all, they are a threat to mainstream economics since a considerable amount of economic power ends up in the hands of some stablecoins’ providers.
The U.S. Commodity Futures Trading Commission fined Tether US$ 41 million. The reason is simple; they claimed that 100% of their assets were backed by USD in the period between 2016–2019 but couldn’t prove that in court.
Andrew Bailey, governor of Bank of England, said that regulations on stablecoins are necessary, but there are some “difficult questions” that need answers first.
In short, most governments are still studying the correct way to regulate the use of stablecoins. A gray zone is around everyone as this article is being written.
You’ll continue to receive the latest news regarding regulations and the crypto market as soon as there is more information around — fear not.
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