Bank of America has released its views on the stablecoin pegged to the US dollar launched by PayPal.
Analysts Alkesh Shah and Andrew Moss see its adoption as being at odds with increased competition from the Central Bank Digital Curreny (CBDC).
Bank of America and its report on PayPal’s stablecoin (PYUSD)
Bank of America has reportedly released its report on the new dollar-pegged stablecoin recently launched by electronic payments giant PayPal, the PYUSD.
Specifically behind the report are Alkesh Shah, head of global strategy for cryptocurrencies and digital assets at Bank of America Global Research, and Andrew Moss, the bank’s global digital asset strategist.
What emerged, is that the adoption of PYUSD might not prove to be as widespread, given that on the one hand it is not expected to accelerate ‘regulatory clarity’ on crypto and on the other hand there is increased competition from CBDCs.
In any case, Bank of America argues that the stablecoin will make PayPal payments more efficient.
Here is what Shah and Moss wrote:
“We expect PYPL’s PYUSD launch to drive payments efficiencies and an improved customer experience over time, but PYUSD adoption is unlikely to be significant in the near term, given lack of wallet compatibility, exchange trading pairs or new functionality. Over the longer term, we expect PYUSD to experience additional adoption headwinds as competition from CBDCs [central bank digital currencies] and yield-bearing stablecoins increases.”
Bank of America: “PayPal’s stablecoin does not accelerate crypto regulatory clarity”
The report from Bank of America then continues by referring to the stablecoin and the US regulatory issue.
“We do not expect PYUSD’s launch to lead to accelerated regulatory clarity, given the stablecoin’s issuance does not alter systemic risk for traditional markets, but the stablecoin may face regulatory headwinds if non-banks are ultimately barred from stablecoin issuance.”
Last week, PayPal announced the launch of PYUSD, a dollar-pegged stablecoin in collaboration with the company Paxos.
Soon after, on X (Twitter), some of the features of the stablecoin were discussed, such as its ability to freeze assets and erase the value from addresses.
Basically, this feature will allow the company to prevent the transfer of certain tokens and destroy assets within specific addresses.
Indeed, these capabilities arise because the stablecoin is centralized, and therefore the company can exert control over the movement of tokens.
The co-existence of stablecoins and CBDCs
Recently, The Cryptonomist interviewed Tadeo, Development Relations Specialist at Phoenix Labs in the Maker ecosystem.
When asked about the digital yuan, Tadeo talked about the co-existence of CBDCs and stablecoins, pointing out that he is happy that governments are embracing blockchain and stablecoins. The fact is that they do not compete with each other, as according to Tadeo, CBDCs and independent stablecoins fulfil different needs in our society.
In general, CBDCs are capturing more and more interest in countries. The crypto company Ripple is offering its solution to develop the Central Bank Digital Currency based on XRP Ledger. After Montenegro, the latest bank in talks is the Central Bank of New Zealand.