In a significant step as the business doubles down on cryptocurrency payments, Coinbase, the biggest publicly listed cryptocurrency exchange, is removing fees on transactions linked to PayPal’s stablecoin and enabling its customers to redeem the token directly for US dollars.
Coinbase and PayPal are working together to expand the use of PayPal’s stablecoin, PYUSD, which was introduced in 2023. According to PayPal, businesses on its network will be able to settle directly in PYUSD rather than using conventional financial rails thanks to the connection with Coinbase.
Crypto traders frequently utilize stablecoins, a kind of cryptocurrency created to maintain a steady value, typically a 1:1 dollar peg, to transfer money between tokens. Proponents like PayPal claim that they might be used to transmit payments immediately, and their use has increased significantly in recent years.
According to Jose Fernandez da Ponte, senior vice president of blockchain, cryptocurrency, and digital currencies at PayPal, “We believe that it creates a really, really powerful combination of being able to connect the consumer bases of PayPal and Coinbase, bringing our merchants to the table, bringing [Coinbase’s] institutional access to the table.”
The two businesses also want to work together in the future to promote the use of stablecoins for payments and investigate PYUSD’s potential applications on decentralized finance platforms, which let users conduct transactions directly on a blockchain network without the need for middlemen.
Lauren Abendschein, global head of institutional sales at Coinbase, stated, “This partnership is all about advancing the future of global payments, taking stable coins mainstream, and pushing forward this technology.”
Only Circle’s stablecoin, USDC, which ranks second in terms of market value, has previously been eligible for Coinbase’s zero-fee treatment.
“Definitely there will be cases for payments where people will make a choice between PYUSD and USDC, and we want to make sure that we establish PYUSD as the best stablecoin for payments,” Fernandez da Ponte continued.
Additionally, Circle has stepped up its efforts to use its stablecoin for payments. The business declared the opening of its Circle Payments network on Monday, which is intended to facilitate cross-border payments and real-time stablecoin settlements between financial institutions.
According to cryptocurrency statistics, the market valuation of stablecoins is above $238 billion. With a market valuation of only $872 million, PayPal’s stablecoin has the potential to increase its market share by integrating with Coinbase.
The two businesses’ collaboration comes as a measure establishing stablecoin regulations for the first time looks set to be passed by the US Congress.
Bills to establish a stablecoin regulatory framework have been advanced by the Senate and the House of Representatives, and the White House stated that it hopes to get a final measure approved by August.
Following his courtship of bitcoin revenue during his presidential campaign, President Donald Trump has attempted to significantly alter U.S. cryptocurrency regulations.
Since taking office, he has signed an executive order last month to establish a strategic bitcoin reserve and selected crypto-friendly officials to positions like the Securities and Exchange Commission.
Additionally, in its most recent attempt to diversify into financial services, the president’s majority-owned Trump Media & Technology Group said on Tuesday that it had secured a legally binding deal to provide a range of retail investment products, including cryptocurrency.
(Hannah Lang reported from New York)
