- The crypto community on Twitter has expressed concerns over PayPal’s new dollar-pegged stablecoin PYUSD.
- Users have highlighted PYUSD’s degree of centralization, which gives PayPal the power to freeze funds.
- Crypto experts have argued that PYUSD’s launch is a net positive for the broader crypto industry.
The crypto community on Twitter has taken issue with the centralized elements of PayPal’s PYUSD stablecoin. Users took a deep dive into the recently unveiled stablecoin’s smart contract and highlighted certain aspects which revealed its questionable degree of centralization.
One of the most controversial findings was Paypal’s ability to control PYUSD to the extent that it could freeze the stablecoin or even wipe it off. However, others on Twitter highlighted that this was true for existing centralized stablecoins, including Tether USD (USDT) and USD Coin (USDC).
Popular crypto expert Erik Voorhees shared his take on the matter and told his followers that all centralized stablecoins likely possessed similar attributes as PayPal’s PYUSD. According to him, the centralization issues surrounding PYUSD were dwarfed by the benefits that it would provide to the broader crypto space.
Voorhees, who founded the decentralized finance protocol ShapeShift, added that PayPal’s decision to launch a dollar-pegged stablecoin would tap into its existing traditional finance users and pave the way for them to be onboarded to the world of centralized crypto. This, in turn, would allow newcomers to familiarize themselves with the blockchain and eventually lead them to the decentralized crypto space.
Some users pointed out that PayPal’s existing terms of service already allowed them to freeze or seize their users’ funds based on controversial topics like online activities or questionable speech. However, most members of the crypto community agreed that PYUSD’s launch was a net positive for the crypto industry.
PayPal unveiled the dollar-pegged PYUSD stablecoin on August 7, 2023. The ERC-20 stablecoin will be 100% backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents. PYUSD will be minted by Paxos Trust Company which is regulated by the New York Department of Financial Services (NYDFS).
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