The Bank of America does not see a future for PayPal’s stablecoin

TL;DR Breakdown

  • Bank of America says that PayPal’s PYUSD will drive payment efficiencies and an improved customer experience, but adoption of the crypto is unlikely.
  • Analyst Alkesh Shah with the Bank of America argues that PYUSD will not have a broad impact on the crypto industry.
  • According to the report, PYUSD will likely target a market that has been largely neglected until now: “blockchain technology-enabled asset transfers, payments, and remittances.”

Description

The launch of PayPal’s (PYPL) stablecoin PayPal USD (PYUSD) is expected to improve payment efficiencies and the customer experience, but adoption of the crypto is unlikely to be significant in the near future, Bank of America (BAC) said in a Thursday research report. Bank of America is not rooting for PayPal’s stablecoin PayPal, as previously … Read more

The launch of PayPal’s (PYPL) stablecoin PayPal USD (PYUSD) is expected to improve payment efficiencies and the customer experience, but adoption of the crypto is unlikely to be significant in the near future, Bank of America (BAC) said in a Thursday research report.

Bank of America is not rooting for PayPal’s stablecoin

PayPal, as previously announced, will develop its own stablecoin, PYUSD, which will be backed by the US dollar and run on the Ethereum network. A stablecoin is a crypto that is linked to another asset, such as the US dollar. Bank of America argues that:

Over the longer term, we expect PYUSD to experience additional adoption headwinds as competition from central bank digital currencies (CBDCs) and yield-bearing stablecoins increases.

Alkesh Shah and Andrew Moss

Shah argued that PYUSD offers fewer advantages than stablecoins with larger market shares and network effects, such as USDT and USDC. In addition, he noted that PYUSD may encounter regulatory obstacles if non-banks are ultimately prohibited from issuing stablecoins, as proposed in a bill pending in Congress.

Investors may have been fine holding non-yield bearing stablecoins such as Tether (USDT) and USD Coin (USDC), when rates were close to zero, but yield-bearing stablecoins will likely become increasingly available and attractive with short-terms rates above 5%.

Alkesh Shah and Andrew Moss

Moreover, according to Shah, PYUSD may lose its appeal as interest rates rise and products with higher yields emerge in the crypto market. He stated that investors might favor stablecoins that generate returns from their underlying assets over those that do not, such as PYUSD.

Shah stated that PYUSD will not target the trading market but rather a “largely untapped” market for blockchain-powered asset transfers, payments, and remittances. This market could expand considerably in the future as more people adopt digital currencies and as more nations develop their own digital currencies for central banks.

We expect PayPal’s PYUSD launch to deliver efficiency in payments and a better customer experience over time. However, we do not expect this to be a game changer for PayPal or the cryptocurrency industry in the near term.

Alkesh Shah 

PayPal’s Stablecoin

In a first for a major financial institution, the payments behemoth announced earlier this week that it was entering the crypto market with its own dollar-pegged stablecoin, PayPal USD. The Ethereum-based token will be available on PayPal and Venmo first and can be exchanged at any time for dollars.

According to the report, investors may not care which stablecoins they hold so long as they are perceived as “safe and accessible on the largest trading platforms.”

Bank of America does not anticipate that the launch of PYUSD will result in “accelerated regulatory clarity” because the stablecoin’s issuance “does not alter systemic risk for traditional markets,” but it may encounter regulatory obstacles if non-banks are ultimately prohibited from stablecoin issuance.

Why PYUSD makes sense

This is not PayPal’s first venture into crypto. The company began enabling users to transfer, send, and receive a variety of prominent digital tokens, such as Bitcoin and ether, in the past year.

Starting on Monday, customers who purchase PayPal USD in the coming weeks will be able to send it to compatible external crypto wallets, make peer-to-peer payments, make purchases, and convert any of PayPal’s supported cryptocurrencies.

According to Omid Malekan, adjunct professor at Columbia Business School and author of “Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms,” the issuance of a stablecoin may be more consistent with PayPal’s core business model than people initially believe.

PayPal’s primary source of revenue is fees charged to merchants for facilitating consumer payments. If these consumers and merchants began transacting with cryptocurrency on the Ethereum blockchain, however, PayPal would no longer be able to charge these fees.

In May of 2022, investors lost tens of billions of dollars after the terraUSD (UST) stablecoin collapsed. However, unlike PayPal’s stablecoin, UST relied on algorithms rather than currency reserves to maintain its peg to the U.S. dollar.

Several fake PYUSD tokens have already appeared on the decentralized exchange Uniswap in an attempt to capitalize on the excitement surrounding PayPal’s new stablecoin.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

文章来源于互联网:The Bank of America does not see a future for PayPal’s stablecoin

Disclaimers:

1. You are solely responsible for your investment decisions and this info is not liable for any losses you may incur.

2. The copyright of this article belongs to the writer, it represents the writer's opinions only, not represents the site's ones. Not financial advice.

Previous 2023年8月12日 03:01
Next 2023年8月12日 04:02

Related articles

  • Arbitrum price analysis: ARB price progresses to $1.17 level as a result of bullish run

    TL;DR Breakdown Arbitrum price analysis shows a bullish trend Suppor for ARB/USD is present at $1.15 Arbitrum prices are facing resistance at $1.18 Arbitrum price analysis is bullish, with the ARB/USD pair rising to the $1.17 level. The price action recently created a bullish engulfing candlestick pattern, which indicates that the token is in an uptrend. The Arbitrum price is trading within the confines of a symmetrical triangle pattern, which could potentially break to the upside. Resistance is found at $1.18, which needs to be breached for a further upside move. Support is seen at the triangle bottom of $1.15, and if breached, a dip to $1.09 could be seen.  The market capitalization for the token has been increasing steadily, indicating that there is strong demand for ARB tokens, and is currently at $1.45 billion. While the trading volume remains low at $208 million, the market cap is on an uptrend and may indicate further price appreciation in the near future. Arbitrum price analysis 1-day chart: ARB is driven to $1.17 by bullish momentum. The 1-day Arbitrum price analysis has…

    Article 2023年5月30日
  • Top U.S. stocks at turning point with Fed’s move

    TL;DR Breakdown U.S. stocks are approaching a critical juncture as the Federal Reserve prepares for potentially the last rate hike in this tightening cycle. Despite early-year recession fears, the U.S. economy has remained robust, supporting a near 19% increase in the S&P 500 index this year. Investors are looking towards the Federal Reserve’s July 26 meeting, hoping for signals of controlled inflation, negating further hikes. Description Major U.S. equities are on the brink of a defining moment as the Federal Reserve gears up to execute what could be the concluding rate hike in one of the most assertive monetary policy constricting cycles witnessed in years. The ongoing year initially signaled potential doom for investors who anticipated that soaring interest rates would … Read more Major U.S. equities are on the brink of a defining moment as the Federal Reserve gears up to execute what could be the concluding rate hike in one of the most assertive monetary policy constricting cycles witnessed in years. The ongoing year initially signaled potential doom for investors who anticipated that soaring interest rates would trigger…

    Article 2023年7月24日
  • Secret Bitcoin mining ring busted in Borneo

    TL;DR Breakdown Authorities in the town of Miri on Borneo Island have dealt a significant blow to an illegal cryptocurrency mining operation after receiving a tip-off from the public. The estimated cost of stolen electricity used by the operation was a staggering 6,000 ringgit per month (equivalent to around $1300 USD). The broader Bitcoin mining ecosystem has also witnessed noteworthy developments in 2023, with the network hash rate reaching all-time highs. Description Authorities in the town of Miri on Borneo Island have dealt a significant blow to an illegal Bitcoin mining operation after receiving a tip-off from the public. The operation came to light when Sarawak Energy, the local utility company, stumbled upon the illicit activity, which involved 34 cryptocurrency mining servers running on stolen electricity obtained … Read more Authorities in the town of Miri on Borneo Island have dealt a significant blow to an illegal Bitcoin mining operation after receiving a tip-off from the public. The operation came to light when Sarawak Energy, the local utility company, stumbled upon the illicit activity, which involved 34 cryptocurrency mining servers…

    Article 2023年7月31日
  • The rise of BRICS and why it’s attracting more countries

    TL;DR Breakdown BRICS, an alliance of Brazil, Russia, India, China, and South Africa, has grown from a concept to a formidable global entity. Initially conceived by Goldman Sachs in 2001, the BRICS countries have leveraged their shared growth trajectories and challenges to amplify their global influence. The establishment of the New Development Bank and the Contingent Reserve Arrangement has positioned BRICS as an attractive alternative to traditional financial institutions like the IMF and World Bank. The ascendency of BRICS, an acronym for the emerging economies of Brazil, Russia, India, China, and South Africa, has captured global attention. A concept once borne out of an investment bank’s observation has grown into a formidable alliance, leading a new direction for the world economy. This development has attracted interest from various nations, marking a significant shift in the global financial and political landscape. The growth trajectory The original concept of BRICS was forged by economist Jim O’Neill of Goldman Sachs Group Inc. in 2001, who identified Brazil, Russia, India, and China as countries exhibiting impressive economic growth rates. Despite the widespread skepticism, these…

    Article 2023年6月1日
  • Friend.Tech is no more – Activity tanks by 94%

    TL;DR Breakdown The daily trading volume on Friend.Tech has decreased by 94% from its all-time high, while the number of daily traders has fallen by 83%.  Friend.Tech network fees dropped from $1.7 million on August 21 to $95,000 on August 27. The collapse of Friend.Tech has left a bitter taste performance on Coinbase’s Base Network. Description The latest craze in the crypto world, Friend.Tech, is facing a significant issue with the presence of automated bots and speculative games. These bots are capable of manipulating the platform, affecting its integrity and fairness. Automated bot activity can manipulate trading volumes, prices, and other market-related metrics. Blink, and you will most probably miss the … Read more The latest craze in the crypto world, Friend.Tech, is facing a significant issue with the presence of automated bots and speculative games. These bots are capable of manipulating the platform, affecting its integrity and fairness. Automated bot activity can manipulate trading volumes, prices, and other market-related metrics. Blink, and you will most probably miss the latest crypto fad. Critics have quickly labeled the decentralized social network…

    Article 2023年8月28日
TOP