PayPal To Offer 3.7% Annual Yield on PYUSD Stablecoin to Drive Adoption

According to a Bloomberg report, PayPal, a global payments company, is preparing to launch a new program in the U.S. The initiative will let users earn 3.7 percent annually on their PayPal USD (PYUSD) stablecoin balances. Scheduled to launch this summer, the feature will be available on both PayPal and Venmo.

Notably, the move is part of PayPal’s continued push into crypto. Earlier this month, the company added support for Chainlink (LINK) and Solana (SOL), expanding its list of supported digital assets.

PayPal To Offer 3.7% Annual Yield on PYUSD

According to the report, the 3.7% yield will be paid in PYUSD. Users can convert it into U.S. dollars, send it to others, or use it for international transfers. The rewards will accrue daily and be paid out monthly.

Jose Fernandez da Ponte, who leads PayPal’s blockchain and digital currency efforts, told Bloomberg that the goal is to make PYUSD a more widely used payment option. He said the company sees stablecoins as a way to build better payment systems for the future.

Interestingly, da Ponte noted that the yield won’t be tied to the Federal Reserve’s interest rates and won’t rely only on the interest PayPal earns from its reserves. PayPal CEO Alex Chriss also shared his thoughts, calling stablecoins a “transformative opportunity” that could change how money moves around the world.

Growing Competition in the Stablecoin Market

PayPal launched PYUSD in 2023 in partnership with Paxos Trust. Currently, the token ranks as the eighth-largest stablecoin by market cap, sitting around $873 million, far behind Tether’s $145 billion and Circle’s $61.7 billion, according to CoinGecko.

Since its launch, competition in the stablecoin market has intensified. Bloomberg reported that fintech giants like Robinhood and Revolut are considering their stablecoins. Stripe has already made a move by acquiring Bridge, a startup focused on stablecoins, and Fidelity is currently testing its own stablecoin product.

Other stablecoin issuers are also exploring new ways to boost usage. Earlier this week, Circle announced it is launching a cross-border payments network to help financial institutions and tech companies settle transactions using stablecoins.

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