PayPal’s Stablecoin Not Likely to Be Used Widely Anytime Soon: Bank of America

Longer term, the bank sees much more competition for the token.

AccessTimeIconAug 11, 2023 at 11:02 a.m. UTC
Updated Aug 11, 2023 at 2:14 p.m. UTC

The launch of PayPal’s (PYPL) stablecoin PayPal USD (PYUSD) will drive payments efficiencies and an improved customer experience, but adoption of the cryptocurrency is unlikely to be significant in the near term, Bank of America said in a research report on Thursday.

“Over the longer term, we expect PYUSD to experience additional adoption headwinds as competition from central bank digital currencies (CBDCs) and yield-bearing stablecoins increases,” analysts Alkesh Shah and Andrew Moss wrote. A stablecoin is a type of cryptocurrency whose value is pegged to another asset, typically the U.S. dollar.

“Investors may have been fine holding non-yield bearing stablecoins such as Tether (USDT) and USD Coin (USDC), when rates were close to zero, but yield-bearing stablecoins will likely become increasingly available and attractive with short-terms rates above 5%,” the analysts wrote.

The payments giant earlier this week said that it was entering the crypto market with its own dollar-pegged stablecoin, PayPal USD, in a first for a major financial company. The Ethereum-based token will be available first on PayPal and then on Venmo, and can be exchanged for dollars at any time.

Investors are likely indifferent to which stablecoins they hold as long as they are perceived as “safe and accessible on the largest trading platforms,” the report said.

Bank of America says it doesn’t expect PYUSD’s launch to lead to “accelerated regulatory clarity” because the stablecoin’s issuance “does not alter systemic risk for traditional markets,” but it could face regulatory hurdles if nonbanks are ultimately banned from issuing stablecoins.

PYUSD will likely target a market that has remained largely untapped until now, including “blockchain technology-enabled asset transfers, payments and remittances,” the report added.

Edited by Parikshit Mishra.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Author placeholder image

Will Canny is CoinDesk's finance reporter.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.