The recent unveiling of PayPal’s stablecoin PayPal USD (PYUSD) has brought about a wave of optimism in the cryptocurrency circles. It is envisaged to bolster efficiencies in payments, bringing users a smooth experience due to its stable value that’s tied directly to the U.S. dollar. Yet as per a latest report out of Bank of America, the cryptocurrency’s reception might not take off considerably in loose terms.
Addressing the digital currency’s outlook, analysts Alkesh Shah and Andrew Moss take a longer view. They see PYUSD encountering larger adoption obstacles as the playing field thickens with competitors such as central bank digital currencies (CBDCs) and yield-bearing stablecoins.
Before, cryptocurrencies like Tether and USD Coin remained appealing to investors, despite them not bearing yield, mostly due to close to zero rates. However, with short-term rates touching the 5% mark, high-interest digital currencies look set to mushroom in appeal.
Just this week, PayPal made public its entry into the crypto sphere, launching its dollar-pegged stablecoin, in a precedent-setting move for a major financial titan. The Ethereum-based token will first feature on PayPal, later on Venmo, and can be swapped for dollars anytime.
Investors typically have no particular preference when it comes to what stablecoins to hold, as long as they are deemed safe and available on top-tier trading platforms, noted the report.
Being aware of the ongoing regulatory uncertainty, the report offered some predictions. The launch of PYUSD isn’t expected to rush a crystallization of regulatory norms as its issuance poses no systemic danger to traditional markets. But, it could encounter regulatory stumbling blocks if non-banks are barred from issuing stablecoins.
Targeting a niche largely untouched so far, PYUSD points towards “blockchain technology-enabled asset transfers, payments, and remittances,” hence broadening the scope of application. Nonetheless, only time will tell the degree to which this ambitious initiative succeeds, and what it means for the existing players.
Source: Coindesk
