PayPal Plans to Offer a 3.7% Balance Reward to PYUSD Holders to Promote Stablecoin Adoption

According to a report by Bloomberg, American payment company PayPal plans to offer rewards to holders of its stablecoin PayPal USD (PYUSD) to encourage more people to use the digital token in an increasingly competitive market.

PayPal and Venmo users in the United States will be able to earn an annual return of 3.7% by holding PYUSD in their platform wallets. These rewards will be distributed in the form of PYUSD, which users can redeem for fiat currency, transfer to others, use for cross-border remittances, or spend at PayPal Checkout. The program is expected to launch this summer.

Jose Fernandez da Ponte, PayPal’s Senior Vice President and General Manager of Blockchain, Cryptocurrency, and Digital Currency, stated in an interview that these rewards (calculated daily and distributed monthly) are designed to encourage users to utilize PYUSD as a payment tool, promoting widespread use across the PayPal network.

According to a previous report by Zombit, PYUSD is issued by PayPal in collaboration with stablecoin issuer Paxos Trust Company, and its value is fully backed by U.S. dollar deposits, short-term U.S. Treasury bills, and cash equivalents, allowing for a 1:1 redemption with the U.S. dollar.

Stablecoins have become one of the most profitable segments in the cryptocurrency space, as the reserves backing such tokens typically include U.S. Treasury securities or other cash equivalents, which offer higher returns in a rising interest rate environment. However, da Ponte noted that the rewards for PYUSD will not be linked to Federal Reserve interest rates and will not solely rely on the interest generated by reserves for payment.

According to data from DefiLlama, PYUSD currently has a market capitalization of approximately $879 million, still significantly trailing behind the market leader USDT (approximately $145.7 billion) and second-ranked USDC (approximately $61.7 billion).

Related Reports: “PayPal’s Stablecoin Strategy: Integrating PYUSD with the DeFi Ecosystem to Become the Top Alternative to USDT and USDC” “Paypal and Venmo Support Ethereum Name Service (ENS) to Simplify Cryptocurrency Payments”