PayPal USD (PYUSD) is a stablecoin designed to keep a value of one US dollar, launched by PayPal in August 2023. It is issued by Paxos Trust Company and backed by dollar deposits, short-term US Treasuries and similar cash equivalents. Customers in the United States can buy, hold and send PYUSD inside the PayPal and Venmo apps, and anyone can move it on public blockchains.
PYUSD was the first stablecoin launched by a large US payments company. It competes with Tether (USDT) and USDC, and with newer bank- and fintech-backed coins such as Ripple USD (RLUSD). PayPal brands and distributes the coin, but Paxos, a regulated trust company that previously issued BUSD for Binance, mints and redeems it and holds the reserves.
PayPal USD in plain terms
PYUSD works like a prepaid dollar voucher that can travel outside PayPal. Each time someone buys one, Paxos puts a real dollar, or a very safe short-term government IOU worth a dollar, into a separate account. When someone hands a voucher back, Paxos pays out the dollar and tears the voucher up. As long as the account always holds at least as much as the vouchers in circulation, each voucher should stay worth a dollar.
What makes the voucher useful is that it can move on blockchains at any hour, to any wallet, often for a fraction of a cent. A PayPal user can send PYUSD to a friend, convert it to other crypto, or withdraw it to a wallet elsewhere, without waiting for a bank to open.
History
PayPal announced PYUSD on 7 August 2023 as an ERC-20 token on Ethereum. In November 2023 PayPal received a subpoena from the US Securities and Exchange Commission about the coin; the SEC closed the inquiry in February 2025 without action. PYUSD launched on Solana in May 2024 and on Arbitrum in 2025, with further networks added later. In April 2025 PayPal began offering US users annual rewards of 3.7 percent on PYUSD balances, paid by PayPal rather than the issuer. On 15 October 2025 Paxos mistakenly minted 300 trillion PYUSD on Ethereum because of an internal error and burned the tokens within about half an hour; no customer funds were affected. Supply grew sharply over the year and passed $4 billion in early 2026.
How the peg works
PYUSD holds its value through one-for-one redemption. Eligible customers can always exchange PYUSD for dollars with Paxos or through PayPal, so if the market price drifts below a dollar, traders can buy it cheaply and redeem it for a full dollar, pulling the price back. The key test is reserve coverage:
- The value of reserve assets is the cash, Treasury bills and overnight repurchase agreements Paxos holds for holders.
- PYUSD in circulation is the number of tokens outstanding, each owed one dollar.
- A ratio of 1.0 or more means every token is fully backed.
If 3.0 billion PYUSD were outstanding and Paxos held $3.03 billion of eligible assets, the ratio would be , a 1 percent buffer. If the reserves fell to $2.97 billion, the ratio would be 0.99 and the coin would be under-backed, which is the risk that depegging describes.
Issuer and attestations
Paxos Trust Company is a limited-purpose trust company chartered by the New York State Department of Financial Services (NYDFS), and PYUSD reserves are held apart from Paxos's own funds for the benefit of holders. Paxos publishes monthly reserve reports and independent attestations of the reserves' value, in the spirit of proof of reserves. In December 2025 the Office of the Comptroller of the Currency conditionally approved Paxos's application to convert to a national trust bank.
Uses and regulation
PYUSD is used for peer-to-peer transfers inside PayPal and Venmo, as a dollar balance in crypto trading, for stablecoin payments by merchants and payout companies, and in DeFi lending markets. In the United States, the GENIUS Act, signed into law on 18 July 2025, created a federal framework for payment stablecoins: issuers must hold one-for-one reserves in cash, deposits and short-term Treasuries, publish monthly reserve figures and may not pay interest to holders. Platform rewards such as PayPal's, paid by a distributor rather than the issuer, remain a point of debate between crypto firms and banks as regulators write the rules. The wider rules are covered in cryptocurrency regulation.
Risks and controversies
Like all centrally issued stablecoins, PYUSD depends on its issuer, its custodian banks and its ability to freeze or claw back tokens, which Paxos can do at the request of authorities, a feature critics of centralized coins dislike. The 300 trillion mint showed how operational errors can create alarming, if short-lived, supply figures. Its market share remains small next to USDT and USDC.