PayPal, the online payments giant, announced it has released a US dollar-backed stablecoin.

The coin, called PayPal USD, will be 100% backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents, according to the company. It will be redeemable 1:1 for US dollars and is issued by Paxos Trust Company.

In the coming weeks, eligible US PayPal customers who purchase PayPal USD will be able to transfer the stablecoin between PayPal and other wallets, sent payments with the coin, fund purchases with PayPal USD, and convert any of PayPal’s supported cryptocurrencies to and from PayPal USD.

It is currently unclear if or when the stablecoin will be available to PayPal costumers outside of the US.

Stablecoins have seen an undulation in their popularity, as several companies and countries have tried to launch their own.

Unlike mainstream cyrptocoins like BitCoin or Etherium, stablecoins are tied to another currency, and therefore have a more predictable value.

Paypal may be the first large financial tech firm to launch their own stablecoin, but other big tech firms have tired.

Just last year, Meta attempted to launch their very own stablecoin, but was met with pushback from regulators which feared the company’s involvement in the volatile cryptocurrency arena would only increase the risks associated with the industry.

Crypto-trading has been met with a flurry of issues, with fraud from every angle. Crypto-scams are on the rise, and many have called for stricter regulations on the industries as several cryptoasset and trading firms gathered millions based on lies. Sam Altman-Fried, the creator of debunked crypto-asset FTX, faces jailtime for misleading investors. Kwon Do-hyeong, also known as Do Kwon, an ex-crypto-boss, is also facing jailtime on allegations of fraud over his crypto-empire.

Scams involving crypto-currency have grown this year as the coins become more popular despite their unpredictable value.

Stablecoins, as they are backed by a known currency, in theory should be more ‘stable’ and at least redeemable against a known currency, but can still face some of the same risks associated with the industry as a whole.

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The gambit is so rampant in fraud and risk that some UK regulators are calling for it to be held under the same regulatory framework as gambling.

Still, the popularity of crypto currency, is undeniable, according to Tony Petrov, chief legal officer at Sumsub commented.

“PayPal’s news today is a testament to the burgeoning popularity of DeFi. This and the remarkable milestone of stablecoins surpassing $100 billion in market value, according to recent reports, highlight their pivotal role as a bridge between digital and fiat currencies. This rapid ascent signals a major transformation in the cryptocurrency ecosystem, and the potential impact of stablecoins on the global financial landscape is an exciting development to monitor closely.

“Importantly, the Financial Action Task Force (FATF) now categorises stablecoins as Virtual Assets (VAs) or traditional assets, recognising their increasing impact on the financial sector. Consequently, providers of stablecoin-related services must adhere to Anti-Money Laundering (AML) regulations to uphold transparency and accountability standards – in the UK, regulations will come into force from September 1, 2023.

“Not following this rule could lead to fraud by not detecting suspicious users, fines, and also significant reputational damage for crypto businesses. Firms must prioritise having crypto transaction monitoring tools in place, as well as comprehensive AML compliance and verification processes both during and following onboarding.”