PayPal has a stablecoin. Will they take on Coinbase next?
“That means that there are a tremendous amount of people that could come into crypto because of what PayPal is doing,” says Avi Felman
BigTunaOnline/Shutterstock modified by Blockworks
In a first for US markets, PayPal introduced the PayPal USD stablecoin, built on Ethereum and issued by Paxos Trust Co.
On the 1000X podcast (Spotify/Apple), Avi Felman, head of digital asset trading at GoldenTree, talks to Cumberland’s Global Head of Trading Jonah Van Bourg about the newest competitor in the growing stablecoin market.
PayPal’s user base of over 400 million overshadows Coinbase, which has about a hundred million users, Van Bourg says.
“That means that there are a tremendous amount of people that could come into crypto because of what PayPal is doing,” says Felman.
Read more: PayPal launches stablecoin tied to the US dollar, issued on Ethereum
Felman wonders about the financial company’s next step. As of now, the PayPal app lists four cryptocurrency assets for trading. “They list bitcoin (BTC), ethereum (ETH), litecoin (LTC), and bitcoin cash (BCH),” he says.
“And now, they’re going to have a stablecoin. Are they going to start taking on Coinbase?” Van Bourg notes the company’s entry into stablecoins could indeed spell trouble for Coinbase.
“Green shoots” in crypto environment
Felman observes that the crypto environment is “shifting,” with potential spot bitcoin ETFs on the horizon, PayPal’s stablecoin and the ongoing Ripple lawsuit. “I don’t know what’s coming next,” he says, “but it’s clear that there are green shoots in a way that there weren’t prior.”
Van Bourg says PayPal’s stablecoin proves that traditional finance institutions with “enormous amounts of traction” are saying, “We want to launch a product that no centralized database can own or should own. We need a decentralized ledger to operate this product and we have chosen Ethereum.”
Van Bourg foresees PayPal disrupting the current retail merchant paradigm. He suggests the company could possibly make their stablecoin yield interest and then tell merchants, “If you set up a PayPal wallet when someone swipes their PayPal card at your coffee shop or newsstand, we won’t charge you credit card fees.”
“You just get interest-bearing money, yielding five and a quarter percent, wired within block time, 13 seconds from your customer’s account to yours.”
“Suddenly, you’ve disrupted Visa, MasterCard, JPMorgan, and Bank of America.” he says. “No one needs a checking account or a credit card anymore.”
“Obviously, there are a few roadblocks between that happening and where we are today,” he admits. “But it’s a first step along that journey, and it shows you the promise of crypto for developed markets.”
Updated Aug. 10, 2023 at 1:35 pm ET: Removed quotes from Felman and Van Bourg.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
