PayPal Unveils 3.7% Yield on PYUSD Balances to Boost Stablecoin Adoption
Monthly Rewards in PayPal’s PYUSD Aim to Drive Crypto Payment Usage
PayPal is making a bold move into the stablecoin economy by offering a 3.7% annual yield on balances held in its U.S. dollar-pegged stablecoin, PayPal USD (PYUSD). According to a Bloomberg report dated April 23, the payments giant will begin this program in summer 2025, offering monthly rewards paid in PYUSD.
The initiative is designed to increase the utility and usage of the stablecoin on PayPal’s platform, encouraging users to hold, spend, or transfer PYUSD instead of converting it back to fiat.
“This is a strategic step toward mainstreaming stablecoin usage,” a PayPal spokesperson told Bloomberg.
How It Works: Daily Accrual, Monthly Payouts
Under the new program, rewards will accrue daily and be distributed monthly to eligible PYUSD holders. Users can spend PYUSD, transfer it to others, or cash it out for U.S. dollars, giving holders flexibility in how they use their rewards.
The program comes at a time when PYUSD’s market cap sits at $873.3 million, down from its $1 billion milestone reached in mid-2024. Yet, with this new incentive, PayPal hopes to reverse the decline and reinvigorate user engagement.
Regulatory Hurdles: Is PYUSD Now a Security?
As PayPal ventures into yield-bearing stablecoins, questions of regulation loom large. Tzahi Kanza, CEO of Syndika, warned that offering interest may reclassify PYUSD as a security under U.S. law.
“Stablecoins that don’t offer yield are generally not considered securities,” said Kanza. “But once they do, the line gets blurry.”
Still, Kanza reassures users that the main risk isn’t interest, but rather “losing the peg to the dollar.”
PayPal’s Expanding Crypto Footprint
PayPal has recently expanded its crypto offerings by integrating popular tokens like Chainlink (LINK) and Solana (SOL). The company’s crypto pivot is being seen as a long-term bet on blockchain innovation.
Marc Boiron, CEO of Polygon Labs, credited PayPal and Stripe as key drivers behind the rapid growth of the stablecoin sector, noting their integration helped shift public perception.
“Companies like Stripe and PayPal are the reason stablecoins are booming,” Boiron told Cointelegraph.
PYUSD: The Journey So Far
Launched in August 2023, PYUSD is issued by Paxos Trust Company and remains fully backed by cash deposits, short-term U.S. Treasuries, and equivalent assets. The stablecoin is regulated by the New York State Department of Financial Services and initially launched on Ethereum’s ERC-20 before expanding to Solana.
Despite being dwarfed by Tether’s USDT, which boasts a market cap of $145.3 billion, Kanza believes PayPal could gain ground by focusing on compliance, transparency, and yield—areas where Tether falls short.
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