By Hannah Lang
(Reuters) -Coinbase, the largest publicly traded cryptocurrency exchange, is waiving fees on transactions connected to PayPal’s stablecoin and allowing its users to redeem the token directly for U.S. dollars, a major milestone for PayPal as the company doubles down on crypto payments.
The move is part of a joint effort by Coinbase and PayPal to increase the adoption of PayPal’s stablecoin, called PYUSD, which it launched in 2023. PayPal says the integration with Coinbase will allow merchants on its network to settle directly in PYUSD instead of traditional financial rails.
Stablecoins, a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, are commonly used by crypto traders to move funds between tokens. Their use has grown rapidly in recent years, and proponents like PayPal say that they could be used to send payments instantly.
“This combination of being able to connect the consumer bases of PayPal and Coinbase, bringing our merchants to the table, bringing [Coinbase’s] institutional access to the table — we think that it creates a really, really powerful combination,” said Jose Fernandez da Ponte, PayPal’s senior vice president of blockchain, crypto and digital currencies.
The two companies also plan on partnering for future efforts to increase the adoption of stablecoins for payments and explore use cases for PYUSD on decentralized finance platforms, which allow users to transact directly on a blockchain network without intermediaries.
“This is a partnership that is all about advancing the future of global payments, taking stable coins mainstream, pushing forward this technology,” said Lauren Abendschein, global head of institutional sales at Coinbase.
Coinbase has previously only offered the same zero-fee treatment for Circle’s stablecoin, USDC, the number two stablecoin in terms of market capitalization.
“Definitely there will be cases for payments where people will make a choice between PYUSD and USDC, and we want to make sure that we establish PYUSD as the best stablecoin for payments,” said Fernandez da Ponte.
Circle has also doubled down on the use of its stablecoin for payments. On Monday, the company announced the launch of its Circle Payments network designed for cross-border payment and real-time settlement of its stablecoins between financial institutions.
Stablecoins have a market capitalization of more than $238 billion, according to crypto data provider CoinGecko. PayPal’s stablecoin has a market cap of only about $872 million, but it could stand to gain greater market share through its integration with Coinbase.
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