Like most forms of cryptocurrency, stablecoins — which typically peg their value to a government-issued currency — are still used mostly for investments while
Payment companies are
Non-crypto companies, particularly companies with a heavy focus on traditional payments, have not fared well in stablecoins. The
But that's about to change, argues Ben Reynolds, managing director of BVNK, saying that the demand and potential market are starting to come together. "PYUSD is a stablecoin for real-world purposes instead of crypto trading," Reynolds said.
How BNVK works
BVNK will let companies access PYUSD on its payments platform. These businesses can then create PYUSD wallets, settle with suppliers, pay employees and accept consumer transactions in PYUSD. PYUSD's potential to scale quickly and provide millions of users via its ties to PayPal is the attraction, according to Reynolds.
PayPal has about 426 million active users, according to
BVNK is looking for more mainstream users who may not be versed in using digital assets for payments.
"People who want to trade or invest in crypto want to use an exchange that may or may not have onramps and offramps for fiat currency to make payments," Reynolds said. "We think people who have stablecoins will want to hold the assets in a digital wallet as a store of value for payments."
PayPal did not provide comment by deadline. The company's history and brand as a payment company provides lots of potential, according to Reynolds. BVNK, which supports crypto trading, sees PYUSD as a way for employers and contractors to reach workers, particularly those who are concerned about traditional currency fluctuations in their local market.
For example, a contractor in Argentina or elsewhere with a mobile phone and digital wallet may prefer to be paid in a U.S. dollar-backed stablecoin with access to a payment company with a global reach. "To have access to U.S. dollars, and the fact that this can happen over the internet, is incredible," Reynolds said.
Because stablecoins peg their value to traditional currency, they are generally considered a better bet for payments than other types of cryptocurrencies, which have more volatile valuations.
Writing for
PYUSD, for example, is issued by Paxos and is subject to Paxos' U.S. dollar-backed stablecoin terms and conditions, according to Enrico Camerinelli, strategic advisor for Datos Insight.
"Currently, the use of stablecoins is subject to issuers' internal risk management practices. PayPal states in its
Another contender
The fintech MNEE is also developing a stablecoin designed for mainstream payments. The coin, which will be called MNEE, will use the BSV blockchain and be backed by U.S. Treasury bills and dollars. MNEE's stablecoin will focus on P2P payments, remittances and other international transfers, payment settlement for retailers and businesses, along with Web3-related payments.
The stablecoin will also be issued in short increments for online gaming payments, social media transactions and subscriptions.
"Business models relying on microtransactions have been largely unviable because the transaction fees of traditional payment methods and blockchain mining fees are often greater than the microtransactions themselves," said Savvag Rigas, chief financial officer of MNEE, adding that the speed and design of the blockchain can reduce payment processing costs.
Stablecoins, as a form of electronic money rooted in blockchain technology, bring to the table unique advantages such as traceability, irrevocability, and the capability for
"Furthermore, stablecoins hold the distinction of being the inaugural form of currency based on distributed ledgers, playing a pivotal role in the growth and widespread acceptance of decentralized finance," Camerinelli said.
