This summer, PayPal will begin offering a 3.7% annual yield on its U.S. dollar-backed stablecoin, PayPal USD (PYUSD), to U.S. users. Rewards will be paid in PYUSD, accrue daily, and be distributed monthly. Users can store PYUSD in their PayPal or Venmo wallets and use it for purchases, transfers, or fiat conversion.
Launched in August 2023 via Paxos Trust Company, PYUSD is fully backed by U.S. dollar deposits, short-term Treasuries, and similar assets. While initially deployed on Ethereum and later on Solana, its market cap has declined from a 2024 peak of $1 billion to around $873 million—still modest compared to Tether’s USDT at over $145 billion.
PayPal says the yield program aims to encourage everyday usage of PYUSD rather than passive holding. “We are halfway in a 10-year journey,” said Jose Fernandez da Ponte, head of blockchain at PayPal. CEO Alex Chriss added, “We are thinking a lot about how we can change the expense profile of the payments landscape by using stablecoins.”
The rewards won’t be solely funded by interest from PYUSD reserves, giving PayPal more flexibility than stablecoins strictly tied to Treasury yields. Fernandez da Ponte emphasized the return isn’t dependent on Fed rates.
However, the program may raise regulatory flags. Tzahi Kanza, CEO of Syndika, noted that offering yield could change the token’s classification. “Stablecoins that don’t offer yield are generally not considered securities. However, yield-bearing stablecoins may fall under that classification,” he said, adding that the key risk remains depegging from the U.S. dollar.
PayPal has been expanding its crypto services, recently adding support for Chainlink (LINK) and Solana (SOL), and enabling PYUSD for cross-border settlements through Xoom. It continues working toward deeper integration of PYUSD across its global payments infrastructure.
Meanwhile, fintech rivals like Robinhood, Revolut, Stripe, and Fidelity are also entering the stablecoin space. Coinbase already offers yield on USDC, and Circle recently launched a network for stablecoin-powered international payments.
