PayPal PYUSD Introduces Interest Rewards With Anchorage Bank

Anchorage Digital, a U.S. crypto firm with a bank charter, and PayPal are collaborating to offer PYUSD holders interest rewards.

PayPal is enhancing its stablecoin efforts by introducing an interest rewards program for holders of its dollar-pegged PYUSD stablecoin, in collaboration with Anchorage Digital. This program marks the latest development in PayPal's broader initiative to expand the adoption of its stablecoin.

Anchorage Digital, a U.S. crypto firm with a bank charter, is partnering with PayPal to offer interest rewards to PYUSD holders. This move is designed to stimulate the utilization of PYUSD, which has encountered challenges in gaining market share since its introduction.

Despite favorable market reception, the company's stablecoin has a relatively small market capitalization, estimated at less than $1 billion, compared to competitors like Tether, which boasts a market cap exceeding $117 billion.

The program provides incentives to accredited investors who hold PYUSD through Anchorage Digital's bank, its Singapore-based entity, or the non-custodial wallet Porto. These rewards will stem from the interest generated by the underlying assets backing the stablecoin, such as U.S. Treasuries, and will not be classified as a marketing expense.

As this PayPal rewards program unfolds, the legal landscape for stablecoins in the U.S. remains murky. The SEC has asserted that certain stablecoins should be classified as securities, while federal courts have not always concurred with this view.

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