PYUSD: The Bridge Connecting TradFi and Crypto Assets

In the wave of digitalization, TradFi and Crypto Assets have become the focus of people's attention. There seems to be an invisible divide between these two fields, making their connection vague and distant. Now, an emerging stablecoin named PYUSD is rapidly bridging this gap, becoming a solid bridge connecting TradFi and Crypto Assets.

As the first compliant stablecoin issued by a non-encryption company, the emergence of PYUSD holds significant symbolic meaning. It represents the traditional finance industry's further exploration of Crypto Assets, while also indicating a notable shift in corporate attitudes towards stablecoins. This change suggests that the acceptance of regulatory policies is gradually increasing. In the future, this transformation will undoubtedly further drive the integration of Web3, TradFi, and the real world. PYUSD will play an important role as a bridge connecting them.

PYUSD may become America's "digital dollar"

Recently, a payment platform announced the launch of the PYUSD stablecoin, marking it as the first mainstream financial services company to adopt Crypto Assets for payments and transfers. The value of PYUSD will be pegged to the USD at a 1:1 ratio, backed by cash deposits, U.S. short-term government bonds, and other equivalent cash reserves.

The goal of PYUSD is to enable instant conversion to USD, while also allowing exchanges for other Crypto Assets provided on the platform's network. To achieve this, the platform plans to integrate PYUSD into its payment application, allowing users to freely send and receive tokens between wallets. Additionally, as an ERC-20 token based on the Ethereum blockchain, PYUSD can also be transferred to third-party wallets that are compatible with the platform, providing users with a wider range of choices and flexibility.

In order to ensure the stability and functionality of PYUSD, the platform will first conduct payment tests among institutions and then quickly open to U.S. users. In the future, eligible U.S. customers will enjoy the following benefits:

• Transfer PYUSD between the platform and compatible external wallets.
• Use PYUSD for person-to-person payments.
• Choose to use PYUSD for purchase at checkout.
• Convert any Crypto Assets supported by the platform to PYUSD.
• There are no fees for purchasing, selling, holding PYUSD, or transferring PYUSD to a qualifying U.S. balance account.

In addition, to increase transparency and trust, starting in September, there are plans to release a public monthly reserve report for PYUSD, detailing the assets that make up its reserves. Furthermore, an independent third-party accounting firm will be commissioned to publicly verify the value of the PYUSD reserve assets, in accordance with the attestation standards set by the American Institute of Certified Public Accountants (AICPA), to ensure accuracy and reliability.

It is also worth noting that PYUSD and its reserve assets will be strictly regulated by the New York Department of Financial Services (NYDFS), which means that customer assets will not be used to pay off liabilities even in the event of the issuer's bankruptcy. This alone puts PYUSD ahead of most of the existing stablecoins.

According to future plans, PYUSD will first be launched on its payment application. This move is of strategic significance, with 430 million active users globally; the launch of PYUSD in the app can quickly expand its user base in a short time. Additionally, the leading online payment advantages can lay a solid foundation for the global promotion of PYUSD. At the same time, the worldwide business cooperation network will also bring PYUSD into more application scenarios, and by then, PYUSD may become a globally accepted "digital dollar," widely used in daily consumption through the payment network.

Launching PYUSD Stablecoin: Building the Future of Web3 Business Scenarios

The stablecoin plan for PYUSD has been in preparation for a long time, but progress has been slow due to regulatory policy impacts. According to the published PYUSD contract address, 1.1 million coins were minted as early as November 2022, and multiple small transfer tests were conducted. Subsequently, on February 1, 2023, another 26.4 million coins were minted. However, on February 23, the issuer of PYUSD destroyed 25.5 million PYUSD.

The cause of this incident is the investigation by the U.S. Securities and Exchange Commission (SEC) regarding a stablecoin issued in cooperation with a certain trading platform. The SEC believes that the issuer is suspected of issuing securities without registration. Subsequently, the New York State Department of Financial Services (NYDFS) conducted oversight and required the issuer to stop minting the relevant stablecoin. This not only affected the parties involved but also temporarily shelved the issuance plan for PYUSD. It was not until August 7 that the launch of PYUSD was officially announced.

The timing of the release of the PYUSD stablecoin is very clever. After actively embracing Web3 and reaping many benefits in places like Singapore and Hong Kong, the attitude of the U.S. political scene also shows signs of change, aiming to embrace digital assets in a timely manner. This trend can be seen from events such as BlackRock's application for a Bitcoin ETF and the court ruling that XRP is not a security. Changes in the regulatory environment often determine the fate of an industry, and the compliance path of PYUSD also highlights the shift in the U.S. regulatory policy towards stablecoins.

It is worth mentioning that the issuance of stablecoins is not the first foray into the crypto space. As early as 2014, we had already enabled Bitcoin payment functions through partnerships with cryptocurrency exchanges. Over the years, we have been continuously exploring the crypto industry. To date, we have fully realized the capabilities to purchase, hold, sell, and transfer mainstream crypto assets. In addition to creating products and services that enhance the utility of digital currencies, we are also committed to improving consumers' and merchants' understanding of crypto assets, stablecoins, and central bank digital currencies (CBDC), and we help users understand related knowledge and risks by providing educational content.

The purpose of doing this is clearly not just to issue stablecoins; stablecoins are merely the foundation for achieving a larger goal. As a compliant USD stablecoin, PYUSD possesses the dual advantages of network payment and on-chain support. Combined with a large user base, market influence, and business cooperation network, the use of PYUSD will surpass the scope of traditional stablecoins, having a wider range of application scenarios. Some traditional online payment scenarios can be shifted on-chain, such as cross-border transactions and remittances. Meanwhile, by leveraging the advantages of on-chain payments with PYUSD, it is possible to reconstruct the business scenarios of the Web2 world in Web3 and realize new advantages. It can be said that PYUSD will become an important tool for building Web3 business scenarios in the future.

What Changes Will PYUSD Bring to the Crypto Industry

The launch of PYUSD plays an important role in the Web3 strategy and has also had a profound impact on the entire Crypto Assets industry, mainly reflected in the following aspects:

Reigniting the Battle of Stablecoins

In the stablecoin market, USDT and USDC have always dominated. According to data, USDT currently ranks first with a market share of 67.2%, followed closely by USDC with a market share of 20.6%. Meanwhile, the stablecoin jointly issued by a certain platform has only 2.8% market share, ranking fourth. However, with the strong entry of PYUSD, the stablecoin market may welcome a new competition.

Currently, certain stablecoins are facing the greatest challenges as regulators demand they halt the minting of new coins. Since PYUSD and other stablecoins are issued by the same issuer, once PYUSD is successfully launched, it has the potential to quickly replace certain stablecoins in the market. The second most affected is USDC, as PYUSD has a similar customer base to USDC, and this group of customers tends to prefer using US-regulated stablecoins rather than offshore stablecoins. In contrast, the stablecoin currently least affected may be USDT. According to reports, a technology lead stated that the launch of PYUSD will not impact it, as PYUSD only operates in the United States, while it does not operate in the United States.

However, to make PYUSD competitive in the stablecoin market, the primary condition is that PYUSD must be listed and traded on exchanges, so that it can leverage its advantages. There is currently confirmed news that a certain exchange has announced it will be the first exchange to list the PYUSD stablecoin. Once liquidity and other conditions are met, trading will commence immediately, and an announcement will be made to inform users. Users need to be patient and closely monitor relevant announcements.

has triggered a stablecoin boom in traditional industries.

Entering the stablecoin market may have higher strategic goals, but making money is undoubtedly the primary consideration. So, do stablecoins have profitability? The answer is yes, in fact, they are very profitable. Stablecoin issuers have large cash reserves and do not need to pay interest to customers; they can make a fortune simply through the issuance of stablecoins. It is reported that a certain stablecoin company achieved a net profit of 1.48 billion USD in just the first quarter of this year, while the company has only over 50 employees.

In the past, the issuance of stablecoins may have faced pressure from regulatory policies. However, the successful issuance of the PYUSD stablecoin undoubtedly has given more traditional financial institutions a glimpse of opportunity. The model of collaborating with issuers to issue stablecoins represents an important step for mainstream finance towards crypto assets and blockchain technology. It is reported that several institutions are actively exploring the possibility of incorporating stablecoins into their product lines. If there are no significant opposing voices in the market, they will quickly enter this field, which will undoubtedly trigger a new wave of stablecoin enthusiasm.

Accelerate the adoption of Crypto Assets

The launch of PYUSD has played an important role in promoting the adoption of Crypto Assets. By introducing PYUSD on payment applications, it has opened up the possibility of using stablecoins for daily transactions. This means that 430 million users have the opportunity to choose PYUSD as their currency for daily settlements. They can enjoy the advantages of convenient cross-border settlements and zero transaction fees. This is very beneficial for users and also helps promote the development of Crypto Assets as a legitimate payment method, facilitating its wider acceptance.

In the past, the only way to obtain stablecoins was through crypto companies. However, with the entry of PYUSD into the market, millions of users can enter the world of encryption by using one of the widely used payment platforms globally. This will provide ordinary users with a more convenient and secure way to participate in the application and development of encryption technology.

This initiative not only opens a door to the encryption field for traditional financial institutions but also paves a friendlier and more accessible way for ordinary users to enter. By launching the PYUSD stablecoin and integrating it into the payment platform, it provides strong support for the popularization and application of Crypto Assets. This initiative not only helps to promote the development of encryption technology but also further drives the acceptance of Crypto Assets globally.

Promote the formulation of regulatory policies

At the end of July 2023, the U.S. House Financial Services Committee reviewed and approved the "Payment Stablecoin Clarity (Transparency) Act." The purpose of this act is to provide a clear regulatory framework for stablecoins, aiming to protect U.S. investors and consumers by establishing unified standards. However, the act has faced opposition from the Federal Reserve and the U.S. Department of the Treasury. Democrat Maxine Waters believes that the act has serious issues and is detrimental to the U.S. As of now, Congress has not passed the stablecoin bill, and various institutions are still negotiating.

In this context, the launch of PYUSD and the resulting stablecoin boom may prompt Congress to swiftly pass stablecoin legislation. The introduction of PYUSD has created a sense of urgency for regulatory policies. As the largest payment platform in the United States, the launch of PYUSD means that in the future, potentially hundreds of millions of users may enter the crypto market through this platform. The large number of users could pose risks of money laundering and capital flight. In this situation,