PYUSD: A New Bridge Connecting TradFi and Crypto Assets

In the wave of the digital age, TradFi and Crypto Assets have become the focal point of people's attention. However, there seems to be an invisible chasm between these two fields, making their connection appear vague and distant. Now, an emerging stablecoin named PYUSD is rapidly bridging this gap, becoming a solid bridge connecting TradFi and Crypto Assets.

As the first compliant stablecoin issued by a non-crypto company, the emergence of PYUSD holds significant symbolic meaning. It represents the traditional financial industry's further exploration of Crypto Assets, while also indicating a notable shift in corporate attitudes towards stablecoins. This change foreshadows an increasing acceptance of regulatory policies. In the future, this change will undoubtedly further drive the integration process of Web3, TradFi, and the real world. PYUSD will play a crucial role as a bridge connecting them.

PYUSD may become America's "digital dollar"

Recently, a certain payment platform announced the launch of the PYUSD stablecoin, marking it as the first mainstream financial services company to adopt crypto assets for payments and transfers. The value of PYUSD will be pegged to the US dollar at a 1:1 ratio, backed by cash deposits, US short-term government bonds, and other equivalent cash reserves.

The goal of PYUSD is to achieve exchangeability for USD at any time, while also allowing conversion to other crypto assets offered on the platform's network. To achieve this goal, the platform plans to introduce PYUSD into its payment application, enabling users to freely send and receive tokens between platform wallets. Additionally, as an ERC-20 token based on the Ethereum blockchain, PYUSD can also be transferred to third-party wallets that are compatible with the platform, providing users with a wider range of choices and flexibility.

To ensure the stability and functionality of PYUSD, the platform will first conduct payment tests among institutions, and then quickly open to US users. In the future, eligible US customers will enjoy the following benefits:

• Transfer PYUSD between the platform and compatible external wallets.
• Use PYUSD for person-to-person payments.
• Select PYUSD for purchase at checkout.
• Convert any Crypto Assets supported by the platform into PYUSD.
• There are no fees for purchasing, selling, holding PYUSD, or transferring PYUSD to a qualifying U.S. balance account.

In addition, to increase transparency and trust, the platform stated that starting in September, it also plans to release a public monthly reserve report for PYUSD, detailing the assets that make up its reserves. Furthermore, an independent third-party accounting firm will be commissioned to publicly verify the value of the PYUSD reserve assets, in accordance with the verification standards set by the American Institute of Certified Public Accountants (AICPA), to ensure their accuracy and reliability.

It is also worth noting that PYUSD and its reserve assets will be subject to strict regulation by the New York Department of Financial Services (NYDFS), which means that even in the event of the issuer's bankruptcy, customer assets will not be used to pay off its liabilities. By this alone, PYUSD is already ahead of the vast majority of stablecoins available today.

According to the platform's future plans, PYUSD will first be launched on its payment application. This move is strategically significant, as the platform has 430 million active users globally, and the launch of PYUSD on its application can quickly expand its user base in a short period of time. Additionally, the platform's leading online payment advantages provide a solid foundation for the global promotion of PYUSD. At the same time, the global network of business partnerships will bring PYUSD into more application scenarios, and by then, PYUSD may become a globally accepted "digital dollar," widely used in daily consumption through the payment network.

Building the Future of Web3 Business Scenarios

The platform's stablecoin program began preparations a long time ago, but progress has been relatively slow due to regulatory policy impacts. According to the published PYUSD contract address, PYUSD had already minted 1.1 million coins as early as November 2022 and conducted several small transfer tests. Subsequently, on February 1, 2023, another 26.4 million coins were minted. However, on February 23, the PYUSD issuer destroyed 25.5 million PYUSD.

The cause of this incident was an investigation by the U.S. Securities and Exchange Commission (SEC) into a certain stablecoin. The SEC believes it is suspected of issuing securities without registration. Subsequently, the New York State Department of Financial Services (NYDFS) conducted oversight and requested it to cease minting. This not only affected the parties involved but also led to the temporary suspension of the issuance plan for PYUSD. Until August 7, the platform announced the launch of the stablecoin PYUSD.

The platform has chosen a very clever timing to launch the PYUSD stablecoin. After actively embracing Web3 and reaping many benefits in places like Singapore and Hong Kong, the attitude of the U.S. political sphere also shows signs of change, aiming to embrace digital assets in line with the times. This trend can be seen in events such as BlackRock applying for a Bitcoin ETF and the court ruling that XRP is not a security. Changes in the regulatory environment often determine the fate of an industry, and the compliance path of PYUSD also highlights the shift in U.S. regulatory policy towards stablecoins.

It is worth mentioning that the issuance of stablecoins is not the platform's first foray into the crypto space. As early as 2014, they enabled Bitcoin payment functionality through a partnership with a cryptocurrency exchange. Over the years, they have continuously explored the crypto industry. To date, they have fully implemented features supporting the purchase, holding, sale, and transfer of mainstream crypto assets. In addition to creating products and services that enhance the utility of digital currencies, they are also committed to improving consumer and merchant understanding of crypto assets, stablecoins, and central bank digital currencies (CBDC), and help users understand relevant knowledge and risks by providing educational content.

The platform's purpose is clearly not just to issue stablecoins; stablecoins are merely the foundation for achieving greater goals. As a compliant USD stablecoin, PYUSD possesses the dual advantages of network payment and on-chain support. Combined with a vast user base, market influence, and a network of business collaborations, the use of PYUSD will surpass the traditional scope of stablecoins, having a wider range of applications. The platform can transfer some traditional online payment scenarios to on-chain, such as cross-border transactions and remittances. At the same time, leveraging the advantages of on-chain payments with PYUSD can help reconstruct the business scenarios of the Web2 world in Web3 and unleash new benefits. It can be said that PYUSD will become an important tool for building business scenarios in Web3 in the future.

The Changes PYUSD Will Bring to the Crypto Industry

The launch of PYUSD plays an important role in the Web3 strategy of the platform and has also had a profound impact on the entire crypto industry, mainly reflected in the following aspects:

Reigniting the Stablecoin Wars

In the stablecoin market, USDT and USDC have always dominated. According to DefiLlama, USDT currently ranks first with a market share of 67.2%, followed closely by USDC with a market share of 20.6%. A jointly issued stablecoin has a market share of only 2.8%, ranking fourth. However, with the strong entry of PYUSD, the stablecoin market may see a new competition.

Currently, a certain stablecoin is facing the greatest challenge as regulators demand it to suspend the minting of new coins. Since PYUSD is issued by the same issuer, once PYUSD is successfully launched, it could quickly replace its position in the market. The second most affected is USDC, as PYUSD shares a similar customer base with USDC, a segment of customers who prefer to use US-regulated stablecoins rather than offshore stablecoins. Relatively speaking, the one least affected at present may be USDT. According to reports, the CTO of USDT stated that the launch of PYUSD will not impact it, as PYUSD only serves in the US, while USDT does not operate in the US.

However, for PYUSD to be competitive in the stablecoin market, the primary condition is that PYUSD must be listed for trading on exchanges in order to leverage its advantages. There is already confirmed news that a certain exchange has announced it will be the first exchange to list the PYUSD stablecoin. Once liquidity and other conditions are ready, trading will commence immediately, and an announcement will be made to inform users. Users need to be patient and closely monitor related announcements.

has triggered the traditional industry to enter the stablecoin craze

The platform's entry into the stablecoin market may have higher strategic goals, but making money is undoubtedly its primary consideration. So, do stablecoins have profitability? The answer is yes, in fact, they are very profitable. Stablecoin issuers have large cash reserves and do not need to pay interest to customers; they can make a fortune simply through the issuance of stablecoins. It is reported that the leading stablecoin company achieved a net profit of 1.48 billion USD in just the first quarter of this year, while the company's workforce is only over 50 people.

In the past, the issuance of stablecoins may have faced regulatory pressure. However, the successful issuance of the PYUSD stablecoin has undoubtedly opened up opportunities for more TradFi institutions. The platform's model of collaborating with issuers to issue stablecoins represents an important step for mainstream finance towards Crypto Assets and blockchain technology. It is reported that several payment institutions are actively exploring the possibility of incorporating stablecoins into their product lines. If there are no significant opposing voices in the market, they will quickly enter this field, which will undoubtedly trigger a new wave of stablecoin enthusiasm.

Accelerating the adoption of Crypto Assets

The platform's actions have played an important role in promoting the adoption of Crypto Assets. By launching PYUSD on its application, it has opened up the possibility of using stablecoins for daily transactions. This means that the 430 million users on the platform have the opportunity to choose PYUSD as their currency for daily settlements. They can enjoy the advantages of convenient cross-border settlements and zero fees. This is very beneficial for users and also helps to promote the development of Crypto Assets as a legitimate payment method, facilitating its wider acceptance.

In the past, the only way to acquire stablecoins was through encryption companies. However, with the entry of PYUSD into the market, millions of users can access the crypto world through one of the widely used payment platforms globally. This will provide ordinary users with a more convenient and secure way to participate in the application and development of encryption technology.

The platform's initiatives not only open a door to the encryption field for TradFi institutions but also pave a more user-friendly and accessible entry for ordinary users. By launching the PYUSD stablecoin and integrating it into the payment platform, it provides strong support for the popularization and application of Crypto Assets. This initiative not only helps promote the development of encryption technology but also further advances the global acceptance of Crypto Assets.

Promote the formulation of regulatory policies

At the end of July 2023, the U.S. House Financial Services Committee reviewed and passed the "Payment Stablecoin Clarity (Transparency) Act." The purpose of the bill is to provide a clear regulatory framework for stablecoins, protecting U.S. investors and consumers by establishing unified standards. However, the bill has faced opposition from the Federal Reserve and the U.S. Department of Treasury. Democratic representative Maxine Waters believes there are serious issues with the bill that are detrimental to the U.S. As of now, Congress has yet to pass the stablecoin bill, and various institutions are still in negotiation.

In this context, the launch of PYUSD and the resulting surge in stablecoins may be expected to prompt Congress to pass the stablecoin bill as soon as possible. The launch of PYUSD has brought urgency to regulatory policies. As the largest payment platform in the United States, the introduction of PYUSD means that in the future, hundreds of millions of users may enter the crypto market through this platform. The vast number of users...