原视频：《Will PayPal's PYUSD Steal Market Share From Tether and Circle?》
Interview: Laura Shin, Unchained Podcast
Guest: Jose Fernandez de Ponte, Senior Vice President, PayPal
Compilation: Kaori, Luccy, BlockBeats
On August 7, PayPal announced the launch of PayPal USD (PYUSD), a U.S. dollar stablecoin for transfers and payments. The stablecoin is issued by Paxos and backed by U.S. dollars, short-term treasury bonds and cash equivalents, and will gradually be available to PayPal customers in the United States. Although PayPal has been involved in a lot of business in the encryption field in the past few years, the launch of its official stable currency can still be regarded as a major event in the development of encryption.
Recently, Laura Shin interviewed José Fernández da Ponte, PayPal's senior vice president of cryptocurrency, to discuss in depth how the financial technology giant is developing a long-term strategy around blockchain-based payments. BlockBeats has compiled and compiled this interview. The full text is as follows:
Laura Shin : This week, PayPal launched the stable currency PYUSD on Ethereum. What is PayPal’s vision for PYUSD and how will it be used?
José Fernández da Ponte: We have been active in the encryption field for the past four years, and PayPal's overall vision has always been to become a bridge between fiat currency and Web3, bringing mainstream applications to the payment system. We are a payments company that cares deeply about payment applications, and the launch of PYUSD is a natural progression of that process. This is the culmination of Phase 1, starting with the use of traditional crypto tokens in applications, then moving to on-chain transfers, entering international markets, and now adding a fully supported and regulated stable value instrument that can be used for payments.
We do think stablecoins are the killer application for blockchain right now, and they're very close to the payments market that we care about very much.
Laura Shin: So how do you expect to apply it, such as which industries do you think will use it, DeFi? Or do you see it as simple payment?
José Fernández da Ponte: We do believe that the fundamentals of digital currencies are well suited for payments, with some inherent advantages such as cost, programmability and settlement time. Interestingly, a lot of the discussion focuses on cost per transaction, whereas I'm more interested in settlement time.
We tend to say they are faster and cheaper, but when you pay, speed is cheap, and the advantage of settlement time is very clear. But it will take time, this revolution will not happen overnight, and the mainstream use of stablecoins in everyday payments is still a few years away. But now some industries are very suitable for using stablecoins. There are $122 billion of stablecoins today primarily used in crypto trading and Web3 use cases, including the DeFi you mentioned, and we expect PYUSD to be used there as well. We're seeing some early cases in things like remittances, which is an area that we're very interested in.
A company called Xoom that PayPal acquired a few years ago has been very active in the remittance space, so we do have the right to play a role in this space, and the convergence between remittances and digital currencies has begun. In the B2B payments space, we are seeing increased adoption of stablecoins, which makes perfect sense when you think about it. If you're a company exporting to a foreign country and you want to get paid, rather than receiving a wire transfer that takes three to five days to clear, prompt settlement time is really powerful.
Possibly in addition to cryptocurrencies, the fourth market segment that we believe will be the first to adopt stablecoins is digital goods. In an economy like Minecraft or Roblox, about a hundred billion dollars in digital goods are traded every year. If you're a developer selling in-game digital goods on the current payment system, it can take up to 15 days to get your money. Therefore, if you can do some in-game digital native and instant settlement things, then the advantages are very obvious.
Again, I think we are still a few years away from mainstream use cases for domestic e-commerce or retail, but there is already a very large commercial market that could use stablecoins.
Laura Shin: So you’re saying that DeFi will go further?
José Fernández da Ponte: I think DeFi will be part of the first wave, and today you can only get PYUSD on the PayPal wallet. We are in the process of adding the product, but it is certain that PYUSD will be available on major exchanges at that time, and people will be able to use it for traditional use cases at that time as well.
Laura Shin: I saw some news saying that PYUSD can be sent to "compatible external wallets". There are some regulations that may prohibit transactions to self-hosted wallets, but I want to confirm, does this include self-hosted wallets?
José Fernández da Ponte: Yes, indeed. Regarding compatibility, I would say that PYUSD is an ERC-20 token, it is deployed on the Ethereum blockchain and can be sent to external wallets that support ERC-20 tokens, and that is what compatibility means.
Laura Shin: There is some provision in the user terms that PayPal can reverse a transaction, but I imagine this only applies to certain transactions, such as within the PayPal/Venmo system.
José Fernández da Ponte: I don’t know exactly which part you’re referencing, but there are certainly transactions related to being a fully supported and regulated stablecoin. Our issuance is approved by the New York DFS, where Paxos is the issuer, and New York has very clear and strict requirements in terms of KYC and anti-money laundering regulations, which requires the ability to implement appropriate controls.
Laura Shin: There are already some very popular stablecoins designed to be very similar to PYUSD, such as USDT and USDC. How do you plan to differentiate PYUSD from other similarly designed stablecoins?
José Fernández da Ponte: Yes, I think there are several different factors that make PYUSD a very strong value proposition. The first is obviously the PayPal ecosystem. PYUSD is the only stablecoin accepted by the PayPal ecosystem, which includes PayPal now and will soon include Venmo, as well as our bilateral network. As a result, millions of consumers and merchants will have access to it and can use it as a funding tool for PayPal transactions. This means that if you make a purchase at one of PayPal's millions of merchants and you have a PYUSD balance on hand, you can pay using PYUSD as your funding tool, something I don't think anyone else can do.
The second aspect has to do with fiat currency connections, and PayPal leverages the banking connections we've built over the years. Converting from fiat to stablecoins is a clunky process that sometimes requires moving your wallet to an exchange to pay fees and then withdrawing, a process that takes days. Whereas at PayPal you can transfer PYUSD and sell it, then withdraw to your bank account. We see this as an inherent advantage, both for the uplink and downlink.
The third point I want to talk about is compliance and regulation. PYUSD is issued by New York Trust and draws on our 20 years of experience in tackling and preventing online financial crime.
Laura Shin: Speaking of regulation, stablecoin legislation has now passed the preliminary committee stage in the House of Representatives. Is the timing of your release a coincidence, or does it give you some confidence to launch?
José Fernández da Ponte: We have been following the legislative process for a long time. Obviously, the parties are still divided on the content of the legislation, but this is a democratic process. In general, passage of these bills for consideration is not necessarily a trigger for our publication. A definite trend is happening today regarding stablecoins, a few months ago was MiCA in Europe. Many markets have clear regulation around stablecoins, and now the United States is catching up, and that's why we went to New York, because this is the strictest, strongest, most rigorous framework around stablecoins available today.
Laura Shin: House Representative Maxine Waters issued a statement saying, "She is deeply concerned that PayPal has chosen to launch its own stablecoin without the federal regulatory, oversight, and enforcement framework for these assets." What is your response to that?
José Fernández da Ponte: I saw the senior member’s statement, and from the statement, I understand that her main point is that she wants to legislate for federal regulation of stablecoins, as we just said, this is an ongoing debate in Congress. There are other members of Congress, both Republicans and Democrats, who have different views and that's part of the legislative process. We are very supportive of regulation through legislation, as I said, this is the most stringent framework in place, and we will abide by and comply with any legislation that comes out of Congress.
Laura Shin: Does PayPal think federal regulation is necessary, or does it think state regulation of stablecoins is sufficient?
José Fernández da Ponte: We are a payments company, and in this country payments are regulated at the state level. I think different places regulate it in different ways. For example, in a place like MiCA, it has a very clear definition of payment stablecoins. In our view, if stablecoins are related to payment activities, then it makes sense to include them in the payments framework, which is now regulated at the state level.
Laura Shin: A few years ago, Libra, which was launched by Facebook (now Meta), was an attempt to create a stablecoin that was not directly tied to the value of the U.S. dollar. But I wonder how the company's failure, largely due to regulatory reasons, affected PayPal's launch strategy.
José Fernández da Ponte: We had discussions about Libra, and that was four years ago. But I don't think it affects our approach because we develop in this area the same way we do other businesses. We are both a technology company and a regulated financial institution with a history of 20 years. Our approach has always been to put regulation first, which sometimes means we may move slower than other companies, but we care deeply about the regulatory and compliance framework and our relationships with regulators. As we've said in the past, we have a presence in 200 countries and are one of the few organizations that can do that. We have emphasized that we will always coordinate with regulators as we explore this area. So I think this is not the impact of Libra, but just our nature.
Laura Shin: How do you plan to take this to the rest of the world? Also, will you launch stablecoins anchored to other fiat currencies?
José Fernández da Ponte: We have already launched it on the PayPal wallet, and the next step is to enable the Venmo wallet to also implement this function, so it will still be based in the United States, but we will also consider international expansion. We are not yet considering other stablecoins denominated in local currencies and our current priority is to ensure the success of this launch and make it beneficial for the crypto ecosystem.
Laura Shin: But I believe you must have a rough idea in mind whether you plan to launch a euro stablecoin or a pound stablecoin.
José Fernández da Ponte: No plans at the moment.
Laura Shin: So what does your upcoming monthly reserve report look like, and will it also show proof of reserves?
José Fernández da Ponte: As part of the New York framework, Paxos is the issuer of the token. Periodic audits must be carried out as required. Therefore, this will be similar to other stablecoins issued by Paxos, such as USDP, etc. Users can see an audit report verified by a third party, which shows the amount and composition of the reserve.
Laura Shin: But it's not an address-identifying thing, and people can't use certain functions to prove that their own coins are still held in the reserve.
José Fernández da Ponte: I think for the benefit of all parties, the best way is to visit the Paxos website, which provides reports on other stablecoins, and you can clearly understand the information provided by our side.
Laura Shin: PayPal hopes to build in some digitally native environments such as online games, which seems to be different from PayPal's existing user base, how do you plan to attract these users.
José Fernández da Ponte: I am very interested in payments in the video game industry. If you think about video games, sometimes to outside observers they might be considered only for the young crowd. But in reality, the audience for video games is very much in line with the general population, and it's a very large industry with very strict and constrained computing needs. From the perspective of solving difficult technical problems, this is a very difficult computational problem.
Many computing innovations were born in video games, and I think many innovations in payments will also be realized in video games. We envision some payment use cases that are not currently possible, and stablecoins may make these use cases possible, such as streaming payments. Imagine paying by the second or the minute when you watch a video instead of paying for the entire video? Or can you buy digital items in the in-game environment and take them away? I think we've seen some really exciting experiments where NPCs (non-player characters) or AI agents within the game can connect to a wallet and carry value, and then this autonomous agent within the game can Buy and sell things.
We can't imagine these things in a vacuum. What we do is release a platform product and then developers will develop on it.
Laura Shin: This is one of the reasons why PayPal decided to design PYUSD as an ERC-20 token, and it sounds like it is planning smart contracts and other functions that make money more programmable.
José Fernández da Ponte: Yes, in the beginning we had to think about whether we were going to go down the path of open source protocols and a traditional permissionless environment, or whether we were going to do something proprietary. Then we quickly chose the open approach because we believe in following the developers. You shouldn't tell developers what to do, let them tell you what to do. Choosing Ethereum was a very clear decision because the developer community was already there.
PYUSD is designed to be a multi-chain, so there is absolutely no reason why we can’t expand on other protocols or other layers of the same protocol in the future. Although Ethereum has higher fees relative to other protocols, it also has many advantages. For certain use cases, like we're talking about micropayments or high speed, high throughput, it can be expensive, so we'll definitely expand from there, but Ethereum is clearly the preferred platform for deployment.
Laura Shin: This undoubtedly opens up a new source of income for PayPal. First of all, PayPal can make money from deposits such as government bonds. The handling fee is 1.5% of the deposit or transaction?
José Fernández da Ponte: Traditionally the monetization mechanism for stablecoins has been through reserve earnings, but in the current interest rate environment this has become a considerable source of profit for the industry, but we believe that this should not be the only monetization mechanism. The interest rate environment may change, so our assumption is that when these stablecoins are adopted, we will monetize them through instruments that are closer to the traditional payments business. That is, when merchants wish to accept stablecoin settlement, they need to pay the merchant discount rate.
In addition, people may convert stablecoins of one currency into other types of stablecoins, which may involve certain fees. Regarding fees, there are no fees when buying PYUSD on the PayPal app, and there are no fees when selling PYUSD. You can buy $1 for $1, with no fees involved, or you can sell $1 and your PayPal balance will be credited. $1, of course transfers are also possible, and we don't charge any PayPal fees for these transfers. The only fees you need to pay are the ones the Ethereum protocol requires you to pay. In the PayPal ecosystem, we do charge transaction fees, but there are no fees for stablecoins.
Laura Shin: Going back to my previous question about PayPal's revenue sources, how big does PayPal think this potential business line will become?
José Fernández da Ponte: It could be very important in the long term, but our expectations for next year are more modest. What's interesting is that this is often a very polarized environment. Stablecoins exist for evidence, right? There are now $120 billion in stablecoins on the market, and we hope to capture some of the market share while also helping to expand the entire market.
I saw an analyst report a few days ago, and it said that stablecoins will grow from $122 billion now to $2.8 trillion in five years, which is a huge increase, meaning a 22-fold increase in five years, but I Think of it as a project that will take years to develop. We want to build the right use cases and roll out. Growth will definitely happen, but we have a long-term mentality. It will be a journey that spans many years.
Laura Shin: How does the app present this payment method to users? Is it an option among all payment options, or are there any incentives for people to try it?
José Fernández da Ponte: There are two different places where it shows up, the first one is when you go into the app, there is a cryptocurrency section in the app and you will see it as an add-on token and you will see that we support The coins, Bitcoin, Ethereum, Litecoin and Bitcoin Cash, as well as PYUSD, can be bought, sold and transferred to external wallets there.
During the checkout transaction, we provide consumers with choices that are not predefined and do not direct them to any specific payment method. So it will appear as another payment option, but will not be given more priority during checkout. If you decide to use PayPal and pay with a credit card, your credit card will be shown first, and others will be shown after that, including PYUSD.
Laura Shin: Well, this has been a really interesting discussion. Is there anything else I didn’t ask about PYUSD that you’d like to mention?
José Fernández da Ponte: As I said at the beginning, we do believe that stablecoins are the killer app in this space. The advantages in terms of settlement time, cost and speed are very important, but it will take some time for mainstream payment adoption. So we took a crypto-first strategy and then started exploring some retail cases. When it comes to competition, I believe we will have some market share here, but also believe there is a lot of demand in the market and hopefully there will be more fully supported and regulated stablecoins, which will be a boon for the entire industry. Good development.
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