PayPal and Paxos dominated the news cycle on Monday with the announcement of the launch of the PayPal (PYUSD) stablecoin, but concerns have been raised about the possibility of user assets being frozen in their wallets, as is the case with USDT.
Crypto Community Adverse to Paxos Wallet Freeze Feature
The PYUSD stablecoin issued by Paxos has a condition that is not too welcomed by the crypto community, which has dulled the initial excitement for the launch of the PayPal stablecoin. According to reports, Paxos, a blockchain infrastructure firm that issued the PYUSD has several centralization issues which give them a certain amount of control over user’s wallets.
Information published on its GitHub account reveals that Paxos can freeze or suspend users’ wallets and transfer functions on PYUSD authorization in the case of a security threat. The Paxos freeze feature is quite similar to Tether’s USDT which is able to freeze/blacklist users’ addresses involved in fraudulent activities. Additionally, Paxos can withhold users’ funds and assets, as well as wipe the account clean if the law requires it.
The reactions from the crypto community were instant and not too favorable as investors’ anxiety spiked at the thought of possibly losing their substantial digital assets or having their wallets on lock.
Centralization has always been a touchy subject for the crypto community as decentralized networks are often believed to be more secure and distribute control among network participants rather than a central body.
Paxos has stated that freezing accounts is unlikely to happen often, and the company itself would not execute the process.
PayPal Launches PYUSD Stablecoin
Global payment giant PayPal recently unveiled its latest innovation, the PayPal USD (PYUSD) stablecoin, on August 7, in collaboration with Paxos, a New-York based blockchain infrastructure company. The news comes as a significant development for the Paxos ecosystem, as the integration of cryptocurrencies into the financial industry continues to grow.
The crypto community has largely welcomed this new development, as investors and traders are gearing up to take advantage of the token and its conveniences. Analysts also predict that popular cryptocurrencies like Bitcoin and Ethereum prices will also benefit significantly from the new stablecoin.
The PYUSD is an ERC-20 token developed on the Ethereum blockchain backed by the US dollar. Launching PayPal’s stablecoin is expected to help make crypto trading and offerings easily accessible on the payment platform.
With PayPal’s user base reaching 400 million in 2022, the PYUSD stablecoin launch will also help facilitate crypto adoption and awareness, exposing a significant portion of the global population to digital currencies.
President and CEO of PayPal, Dan Schulman, commented, “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar. Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”