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PayPal’s Stablecoin is a watershed moment for Crypto, leading experts say. 

PayPal’s stablecoin has become one of the biggest news stories of August and the wider year at large. The introduction of the coin came as a surprise to many when it launched a few short weeks ago, and in the days since, it has left many to re-evaluate the world of cryptocurrency. In this week’s newsletter, we take a deep-dive into the world of cryptocurrency, and discover just how important PayPal’s regulated stablecoin is in the fight to secure the industry’s future. 

The world of crypto, and the emerging field of Web3 as a whole, is no stranger to legal battles and regulatory pressure; this month is no different. Leading experts within the Crypto finance world have heralded PayPal’s introduction of their stablecoin as the watershed moment for the industry. 

The stablecoin is being issued by Paxos, a company that is regulated by the New York Department of Financial Services (NYDFS). This is different to other popular stable coins, such as USDT that were created in the early days of Crypto by Tether. In an interview with CoinDesk, Walter Hessert, the strategy lead at Paxos made a point distinguishing PayPal’s new coin from earlier stablecoins, saying: 

“The difference is significant because we have a prudential regulator […]In our case, you have a regulator overseeing every activity involved in the issuance, including the reserve management. It means no matter where you are in the world, anybody who has this token is protected by the oversight and the rules that are set for us by New York.”

PayPal’s decision to launch the stablecoin now is a complex decision in of itself. 2023 so far has been dominated by lawsuits and legal battles, as countries and companies battle for more regulation within the Crypto industry, whilst still maintaining the founding principles of the technology. 

When the Crypto firm FTX collapsed at the end of 2022, it shook the entire industry. Once the dust had settled, millions of pounds worth of crypto coins had been lost and a countless number of investors had seen their shares plummet, or disappear entirely. 

Hessert, in his interview with CoinDesk, was quick to mention the new stablecoins protective measures against such events: 

“Customers’ assets are protected, including if Paxos were to go bankrupt — a situation we now see with a bunch of companies in crypto. If you can end up sitting in line as a general creditor of a private company that issued you a stablecoin, that’s not as good as a physical dollar.”

PayPal is the most recent tech giant to enter the Crypto market, but it isn’t the first to try. Meta, then known as Facebook at the time, attempted to launch a stablecoin in 2019. The coin never left development, but was poised to fundamentally reshape how the financial world looked in the decade to come. 

Libra was pitched as a global currency. The coin would allow anyone, anywhere to transact money over the internet. Libra was planned to be supported by numerous FIAT currencies and overseen by a group of 28 companies. 

Following the announcement of Libra, there was a violent backlash by legislators around the globe. 

Dante Disparte, who was the Libra Association’s head of policy and communications in June 2019 looked back on the stablecoin during a CoinDesk interview:

“I think Libra was met with a giant overreaction around the world. Libra sought permission rather than forgiveness.” 

The main share of the blame for the failure of Libra rests on the shoulders of Meta. Libra was announced soon after Facebook’s infamous Cambridge Analytica scandal, an event that eroded a lot of public trust in the company, and the tech world as a whole. 

PayPal seems to be picking up the mantle as the tech giant to pave the way for stablecoin regulation in law. The world of crypto today is very different to the landscape of 2019. Time will tell if public opinion, and the sentiment of the courts has changed enough to allow PayPal and other stablecoins into the financial infrastructure of the world.