PAYPAL Holdings’s Xoom cross-border money transfer service now allows customers to send funds abroad using US dollars converted from the PayPal USD stablecoin, the latest sign of crypto’s encroachment on international remittances.
PayPal became the first large financial services company to release a public stablecoin when it introduced PYUSD, which is pegged to the US dollar and issued by Paxos Trust, last August. Customers can redeem PYUSD for US dollars and use the stablecoin to fund purchases and buy other cryptocurrencies.
The Xoom move “builds on our goal of driving mainstream adoption of cryptocurrencies while also offering an easy way to securely send money to friends and family at a lower cost”, Jose Fernandez da Ponte, senior vice-president of the Blockchain, Cryptocurrency, and Digital Currency Group at PayPal, said.
While stablecoin advocates have argued that these cryptocurrencies enable faster, cheaper and easier payments, these digital assets have also drawn heavy scrutiny from regulators. Meta Platforms’s attempt to launch its Diem stablecoin fell apart in 2022 after pronounced backlash from policymakers.
These challenges have not stopped other companies from trying to enter the stablecoin sector. Deutsche Bank’s DWS Group, Dutch market maker Flow Traders and crypto fund manager Galaxy Digital Holdings are also forming a company to issue a stablecoin pegged to the euro.
Blockchain developer Ripple Labs said it plans to introduce its own US dollar-denominated stablecoin later this year. Ripple has been engaged in a years-long legal battle with the US Securities and Exchange Commission (SEC) over allegations of selling unregistered securities.
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PayPal has faced setbacks of its own with PYUSD. The company had paused earlier stablecoin efforts because of the changing regulatory landscape around these tokens. In November, PayPal received a subpoena from the SEC’s enforcement division that sought documents tied to the PYUSD project. PayPal said it was cooperating with the probe. BLOOMBERG
