PayPal Launches 3.7% Annual Yield on PYUSD to Boost Stablecoin Usage

PayPal is stepping up its stablecoin efforts by offering U.S. users a 3.7% annual return on their PayPal USD (PYUSD) holdings, aiming to accelerate the adoption of its stablecoin in an increasingly competitive market.

The interest, which will be earned daily and paid out monthly in PYUSD, is designed to make the stablecoin more attractive to users and differentiate it from other players in the market, as reported by Bloomberg.

The initiative, which will be launched this summer, allows users to earn interest while holding their PYUSD in PayPal and Venmo accounts. PYUSD can also be used for transactions through PayPal Checkout, sent to other users, or exchanged for U.S. dollars.

“We are halfway through a 10-year journey,” said Jose Fernandez da Ponte, PayPal’s head of blockchain and digital currencies. He explained that the company’s goal is to create a new set of payment rails that lower costs and increase transaction speed. CEO Alex Chriss added that stablecoins have the potential to reshape the financial landscape.

Since its introduction in 2023, PYUSD has been issued by Paxos Trust and is backed by assets such as U.S. Treasury bills. Despite PayPal’s brand recognition, PYUSD’s market share is still relatively small at $868 million, compared to Tether’s dominant $143 billion USDT market cap, according to data from RWA.xyz.

This move is also a key part of PayPal’s broader push into cryptocurrencies. Earlier this month, the company expanded its supported digital assets list by adding Chainlink (LINK) and Solana (SOL).