By
Bena Ilyas
April 29th, 2024
In a strategic move to bolster PYUSD’s utility and adoption, PayPal announced the integration of PYUSD for funding international transfers through its service Xoom.
March saw a significant downturn in the circulation of PayPal’s stablecoin PYUSD issued in collaboration with Paxos. According to the latest transparency report from Paxos, the total circulation plummeted by 38% to $188.5 million from a peak of $312 million in late February. This unexpected drop occurs against the backdrop of PYUSD’s rapid growth earlier in the year, suggesting a volatile stride in its journey since inception.
Underpinning Factors and Market Position
Despite this setback, PYUSD maintains its stance as a noteworthy contender in the stablecoin market, securing the 13th position by market capitalization. Notably, PYUSD’s market value only represents a silver, precisely 0.18%, of Tether’s (USDT) whopping $106.6 billion market valuation. This comparison starkly highlights the competitive landscape of stablecoins, underlining PYUSD’s ongoing battle for a larger market share amidst giants.
Market and Notional Values of PYUSD Collateral
As of March 29, PayPal’s USD treasury held the U.S. treasury bonds valued at $14.9 million, possessing a notional value close to $14.8 million. The prevailing market value of PYUSD collateral, secured by the U.S. Treasury bond-collateralized reverse purchase agreements, stands at $177.9 million, with the notional value of the position being around $174 million. The overall net assets have reached a total of $192 million, with the notional value of these positions approximating $189 million.
Integration with Xoom: A Strategic Leap
In a strategic move to bolster PYUSD’s utility and adoption, PayPal announced the integration of PYUSD for funding international transfers through its service Xoom. This initiative, aimed at American customers, promises to reduce costs and heighten convenience for cross-border payments.
The integration allows users to seamlessly convert PYUSD to USD, facilitating transactions across 160 countries without incurring additional charges. This feature positions PayPal advantageously against the average global fee of over 6% for similar transactions. This integration not only enhances PYUSD’s visibility but also marks PayPal’s ambition to carve a substantial niche within the stablecoin domain. The fintech giant intends to make PYUSD a more attractive option for users seeking cost-effective and convenient solutions for international money transfers.
Navigating Through Challenges
Despite these forward-looking strategies, PYUSD’s journey is not without challenges. Its market cap and trading volume, while respectable, fall short when pitted against established players like USDT and USDC. This landscape is further complicated by the entry of new contenders and evolving regulatory and market dynamics.
As the stablecoin market continues to evolve, with over $150 billion in valuation and predictions soaring to $2.8 trillion by 2028, the role of strategic integration and market adaptability cannot be overstated. As we move forward, the stablecoin market remains a vibrant and competitive arena. PayPal’s endeavors with PYUSD, especially its integration with Xoom, highlight a strategic vision. However, the fluctuating circulation figures also emphasize the volatile nature of this space.