Stablecoin Battle: How will the launch of PYUSD by PayPal affect USDT and USDC?

Global payment giant PayPal has partnered with stablecoin issuer Paxos to launch a new US dollar stablecoin, PayPal USD PYUSD. Paolo Ardoino, CTO of leading stablecoin Tether, stated that the introduction of PayPal's stablecoin will not affect Tether as the company does not serve US users. Circle CEO Jeremy Allaire generously congratulated PayPal and Paxos.

What is PYUSD? See: Bull Market Catalyst? PayPal and Paxos Collaborate to Launch First Stablecoin: PayPal USD

Tether States USDT Unaffected

According to a report by The Block, Tether CTO Paolo Ardoino mentioned that the launch of PayPal's stablecoin will not impact Tether since PayPal's PYUSD stablecoin is only available in the U.S., where Tether does not offer its services.

He also noted that this is positive for the overall cryptocurrency industry!

This is interesting. The introduction of another stablecoin in the U.S. may erode the payment revenue that major players like Mastercard and Visa rely on. It will also help drive further development in the industry and promote reasonable regulation.

The introduction of PYUSD may make competition in the U.S. more apparent. The Block speculates that this could hint at competition with Circle's stablecoin USDC, while Tether focuses on emerging markets and developing countries.

PYUSD Competing Directly with USDC?

Jeremy Allaire, CEO of Circle, a U.S.-compliant stablecoin issuer, congratulated PayPal and Paxos in a post, expressing his delight in seeing such important internet and payment companies entering the stablecoin space, a development that becomes more evident as regulations become clearer.

I'd also like to congratulate @PayPal and @Paxos for the launch of $PYUSD. It's incredibly exciting to see such a significant internet and payments company entering the stablecoin space.

This is what happens when we start to get regulatory clarity, and with the Payment…

— Jeremy Allaire (@jerallaire) August 7, 2023

Allaire mentioned that the passage of the "Stablecoin Act" could open up a free and competitive market for USD stablecoin issuers, with robust regulation. Stablecoin-related laws are set to take effect in Japan, the UK, the EU, Hong Kong, the UAE, Singapore, and the U.S. Customers will know who they are dealing with, and companies that pass scrutiny from central banks and regulatory bodies will thrive. This will be the market in 2024 and 2025.

The Block also interviewed David Wells, CEO of Enclave Markets, who served as the product lead for Paxos Dollar USDP and Binance USD BUSD from 2017 to 2020 during his time at Paxos.

Wells told The Block that the PYUSD issued by Paxos and USDC may compete for similar customer bases who prefer regulated U.S. stablecoins over offshore stablecoin markets, but for PYUSD to compete fully with USDC, it needs to be listed on cryptocurrency exchanges.

Wells stated:

It is currently unclear when or if PYUSD will be listed on major exchanges, and it may also focus on cross-platform payment applications.

Current Stablecoin Market Share

According to data from CoinGecko, USDT currently has a market value of $83.4 billion, accounting for 66% of all stablecoin market value, far surpassing USDC's $26.1 billion market share, approximately 21%. The stablecoins BUSD and PUSD issued by Paxos, the stablecoin issuer partnered with PayPal, have a market value of only $3.4 billion and $0.5 billion, respectively.