PayPal has teamed up with Anchorage Digital to introduce a rewards program for clients holding PayPal’s USD-backed stablecoin, PYUSD. This new initiative is designed for clients who use Anchorage’s services or the Porto institutional self-custody wallet to store their PYUSD holdings.
According to Anchorage Digital, the program allows participants to earn rewards while ensuring that their PYUSD remains fully accessible and segregated on-chain for quick deployment. Importantly, the rewards program does not involve rehypothecation, staking, or lending.
PYUSD: A Secure, Dollar-Backed Stablecoin
Launched by PayPal in 2023 as an ERC-20 token on the Ethereum blockchain, PYUSD is backed 1:1 by US dollars and issued by Paxos Trust Company, a regulated crypto custodian in the United States. The stablecoin is designed to compete with other major dollar-backed stablecoins, such as Circle’s USD Coin (USDC).
One of PYUSD’s key features is its integration capability with various external developers, wallets, and web3 applications, enhancing its utility and appeal in the digital economy. Stablecoins like PYUSD are increasingly favored for global financial transactions due to their programmability, ease of transfer, and self-custody options, making them particularly useful for global remittances.
Anchorage Digital Leads in Regulated Digital Asset Custody
Anchorage Digital, a leading digital asset custodian in the U.S., not only launched this rewards program but also introduced Porto earlier this year. Porto is a self-custody solution tailored for institutional clients, such as venture funds and sovereign wealth funds.
This sector’s growth is reflected in other institutions as well. For example, Coinbase offers an annual yield of approximately 5.2% on USDC holdings through its institutional custody arm. More recently, Fireblocks received approval from New York’s financial regulator to custody assets for U.S. clients.
“Crypto innovators are eager to leverage their treasury cash but must do so without compromising on security or accessibility,” said Nathan McCauley, CEO of Anchorage Digital.
PYUSD Expands on Solana Blockchain
In a significant development, PayPal’s PYUSD stablecoin has seen its supply on the Solana blockchain surpass that on Ethereum. This growth has been driven by PYUSD’s integration into decentralized exchanges like Jupiter and Orca, where it has been added to liquidity pools. The expansion has allowed PYUSD to establish a strong presence on Solana, alongside other leading stablecoins like USDC and USDT.
PYUSD on the Solana blockchain includes a feature called “confidential transfers,” which aims to provide enhanced privacy for users while maintaining transparency for regulatory purposes. Additionally, Solana’s token extension standard, compliant with the SPL token standard, offers benefits such as reduced development and testing efforts, enterprise-ready capabilities, and enhanced flexibility.
While the stablecoin market, valued at over $140 billion, continues to grow, it remains largely unregulated.
