PayPal's latest crypto play is a stablecoin pegged to the US dollar

• PayPal dives deeper into crypto with the launch of its first stablecoin pegged to the US dollar.
• Dubbed PayPal USD, the new stablecoin will facilitate person-to-person payments and fund purchases.

PayPal is wading further into the cryptocurrency world with the launch of its first stablecoin pegged to the US dollar.

Dubbed PayPal USD (PYUSD), the stablecoin aims to "build the bridge between between Fiat and Web3 for consumers."

"The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar," Dan Schulman, president and CEO of PayPal, said in a press release on Monday.

"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," he added.

Using the new stablecoin, PayPal customers will be able to send person-to-person payments using PYUSD, fund purchases, and convert any of PayPal's supported cryptocurrencies to and from PayPal USD.

The stablecoin will not only be backed by US dollar deposits, but US Treasurys too, the company added. Stablecoins are a type of digital asset that's pegged to a less volatile asset such as the US dollar.

PayPal already tapped the crypto space last June, allowing users to transfer, send, and receive cryptocurrencies including bitcoin, ethereum, and litecoin.

The payment giant's inroads into the industry are a major vote of confidence. The sector got a battering last year following the collapse of FTX.

PayPal shares rose more than 2% in premarket trading on Tuesday following the news of the stablecoin's launch.