PayPal and Anchorage Digital Launch Rewards Program for PYUSD Stablecoin

PayPal has partnered with Anchorage Digital to introduce a rewards program for clients holding PayPal’s USD stablecoin (PYUSD).

The initiative applies to clients who use Anchorage’s services or the Porto institutional self-custody wallet to store their PYUSD holdings.

“PYUSD remains fully accessible and segregated in participants’ accounts on-chain for quick deployment,” the crypto bank said in an announcement.

“Importantly, this program presents a way to earn rewards without rehypothecation, staking, or lending involved.”

PYUSD is Backed 1:1 by US Dollars

PYUSD was introduced by PayPal in 2023 as an ERC-20 token on the Ethereum blockchain, backed 1:1 by US dollars and issued by Paxos Trust Company, a regulated crypto custodian in the US.

The stablecoin aims to compete with other prominent dollar-backed stablecoins like the USD Coin from Circle Internet Financial.

One of the key attributes of PYUSD is its integration capability with a wide array of external developers, wallets, and web3 applications, enhancing its utility and appeal in the digital economy.

Stablecoins like PYUSD are increasingly favored in global financial transactions due to their programmability, ease of transfer, and the option for self-custody, making them particularly beneficial for global remittances.

The emergence of regulated digital asset custodians is becoming more prevalent in the US, with companies like Anchorage Digital leading the way.

Anchorage not only launched this rewards program but also introduced Porto earlier this year, a self-custody solution aimed at institutional clients such as venture funds and sovereign wealth funds.

Today, @Anchorage Digital is pleased to introduce stablecoin rewards on @PayPal’s PYUSD.

Earn competitive rewards on PYUSD balances in our secure custody or in our institutional self-custody wallet, Porto.

Learn more ⬇️:https://t.co/LtcmXRgnCh pic.twitter.com/0ZyoJSvAkp

— Anchorage Digital (@Anchorage) August 22, 2024

This sector’s growth is mirrored by other institutions.

For instance, Coinbase offers an approximate 5.2% annual yield on USDC holdings through its institutional custody arm.

More recently, Fireblocks also received approval from New York’s financial regulator to custody assets for US clients.

“Crypto innovators are eager to leverage their treasury cash but must do so without compromising on security or accessibility,” Nathan McCauley, CEO of Anchorage Digital, said.

PayPal’s Stablecoin Supply on Solana Surpasses Ethereum

As reported, PayPal’s PYUSD has seen its supply on the Solana blockchain surpass that on Ethereum.

The growth of PYUSD on Solana has been fueled by its integration into decentralized exchanges like Jupiter and Orca, where PYUSD has been added to liquidity pools.

The expansion has helped PYUSD establish a significant presence on Solana, alongside leading stablecoins such as USDC and USDT.

PayPal’s PYUSD stablecoin on the Solana blockchain includes a feature called “confidential transfers.”

The feature aims to provide enhanced privacy for users while maintaining transparency for regulatory purposes.

In addition to confidential transfers, Solana’s token extension standard, which complies with the SPL token standard, provides several benefits for PYUSD.

This includes reduced development and testing efforts, enterprise-ready capabilities that can be easily integrated, and enhanced flexibility.

Notably, the stablecoin market, currently valued at over $140 billion, remains unregulated.

Last month, Senators Cynthia Lummis and Kirsten Gillibrand joined forces to propose a new bill aimed at regulating stablecoins.

Under the proposed legislation, payment stablecoin issuers would be subject to reserve and operational requirements, including the creation of subsidiaries dedicated to issuing stablecoins.