PayPal is one of the better known financial companies that arose due to the Internet. It sprung some of the leading Silicon Valley billionaires including Elon Musk and Peter Thiel. The company dominates the online payment space.
It also made news a year or so ago with the introduction of its own stablecoin. The PYUSD was integrated into its operations, being built on Ethereum.
Now the company is expanding its operation by adding it to Stellar. This might look like an insignificant move but it is part of something critical.
In this article we will explode what PayPal is doing and how it indicates the direction financial firms are heading.
Wikipedia
PayPal Expands Its Crypto: TradFi Embracing The Industry
Payments is a huge business, one that is in serious need of an upgrade. The challenge with this industry is the fact that it is dependent upon the banking system. This means adjectives like slow and antiquated are appropriate.
Crypto, specifically stablecoins seeks to fix this. There are networks which can provide near instant settlement. Ironically, Ethereum is not one of those chains although it is a marked improvement over the banking system.
Stellar, on the other hand, is ideally suited for payment. PayPal is smart to set up shop in this network even though it doesn't get the attention of those such as Solana.
Expanding its payment network is a nice step forward. However, on its own, it means little. Here is where the next stage could have an impact.
The even bigger news? PayPal is reportedly building something called PayFi – a kind of financing tool for small businesses that lets them get loans in $PYUSD, directly into their Stellar wallets. It’s fast, global, and totally crypto-native.
This will be a huge step forward. Providing access to near instant loans is something that business require. As always, speed (or lack thereof) is key in all this.
Now that PayPal is bringing PYUSD to Stellar, it’s making a statement: crypto payments should be fast, simple, and globally accessible.
That’s where PayFi comes in. If businesses can borrow and repay in $PYUSD on Stellar, it cuts out slow banks and expensive middlemen.
Big Finance About To Enter
It is expected that the GENIUIS Act will pass the United States Senate this week.
We must note that PayPal is taking these steps without much clarity on regulation within the US. Of course, this bill helps to alleviate that but, until it is signed into law, we are still speculating.
PayPal is showing the pathway that others are likely to follow. Major banks, in my view, are all going to issue their own stablecoins. They will also set up blockchain based payment systems. Again, the lure of speed is to much to pass.
In fact, it is likely they will have to offer these services simply to remain competitive.
The company is making a big bet on crypto based operations becoming the norm. Larger financial institutions might be more measured in their approach. It is unlikely they are going to want to cede so much control to external wallets. Instead, the will be probably build infrastructure on their networks to handle crypto operations.
Whether going all in or using a more hybrid approach, traditional financial institutions are going to immerse themselves within the crypto realm. The connection between fiat and crypto will rapidly grow. It is likely that people will transact, not realizing what they are utilizing since the stablecoin transfers will be taking place on the back end.
DeFi had its chance to make its mark. The big fish are showing up with their ability to develop at a faster pace. A lack of regulation is the problem within the United States, something that should be cleared up in a couple months.
Once this happens, the banks will know what the landscape looks like. It is at that point where we will see massive expansion.
PayPal is taking the lead but likely not to be the last. The household names will be making crypto headlines, probably before the end of the year.