PayPal Releases First PYPUSD Report as Stablecoins’ Total Market Cap Drop to $131.5 Billion

PayPal’s Report

In August, PayPal launched its stablecoin PYUSD with the aim of facilitating fast payments. However, the latest report indicates that the token’s adoption has been slow in its first month of inception.

In the report, PayPal revealed that PYUSD issuer Paxos Trust was holding $45.2 million in reserves, with reverse repurchase agreements accounting for a significant percentage of the figure. For starters, reverse repurchase agreements are collateralized loans involving one company selling securities to others with the hope they will be purchased at a higher price in the future. Per PayPal’s report, only $1.5 million cash makes up the PYUSD reverses.

Stablecoins are cryptocurrencies pegged to the value of fiat currency such as Euro or USD. To maintain their intended prices, they need to be backed using various liquid assets, which are known as reserves.

The total market cap of stablecoins has been declining since Terra’s algorithmic stablecoin UST blew up last year. As of this writing, CoinGecko data shows the stablecoin market cap has dropped to $131.5 billion from $188 billion in May 2022.

“You Should’ve Waited for Policies,” Lawmaker Maxine Water Tells PayPal

UST’s collapse, which caused a $40 billion loss, prompted calls for stablecoin regulations in the United States. The lawmakers in the country are, however, yet to pass policies regulating the stablecoin market. Last month, Member of Congress Maxine Water wrote on her X account that PayPal should have waited for regulations to take effect before launching its stablecoin.

However, the payment giant chose to move ahead with PYUSD since Paxos is regulated by New York’s Department of Finacial Services.

PayPal has promised to continue releasing monthly reports regarding PYUSD reserves, as it aims to operate the stablecoin with transparency.

PYUSD Market Performance

Nonetheless, despite its dedication to transparency, the payments company’s PYUSD has only recorded a market cap of $43 million. That’s far less when compared to market leaders USDT and USDC, which have market valuations of $83.1 billion and $26.7 billion, respectively.

A few crypto exchanges list PYUSD. They include HTX, Kraken, and Coinbase. Over the past 24 hours, the stablecoin has posted a trading volume of $1.25 million. By comparison, USDT and USDC have recorded $14.3 billion and $6.2 billion worth of trades, respectively.