PayPal to woo crypto users with 3.7% return on PYUSD balances

Payment giant PayPal is rolling out a 3.7% yield on its dollar-backed stablecoin to attract users amid growing competition in the market.

PayPal will soon let users in the United States earn 3.7% annually on their PYUSD (PYUSD) stablecoin holdings in an effort to grow adoption of the token, Bloomberg reports. The rewards program is expected to launch this summer and will be available to both PayPal and Venmo users.

Per the report, users will receive the rewards in PYUSD, which can be converted into U.S. dollars, sent to other users, or for international transfers. Although the rewards will accrue daily, they will still be paid on a monthly basis.

Jose Fernandez da Ponte, PayPal’s senior vice president and general manager of blockchain, crypto and digital currencies, told Bloomberg that the idea is to increase use of PYUSD as a form of payment as the company sees stablecoins as “building the next generation of payment rails.”

PayPal launched PYUSD in 2023 via a partnership with Paxos Trust Co. As of press time, it’s the eight stablecoin by market capitalization, sitting around $873 million, far behind Tether’s USDT with $145 billion or Circle’s USDC with $61.7 billion, according to data from CoinGecko.

For PayPal, the launch of this latest feature comes as competition in the sector heats up, with Robinhood and Revolut also exploring stablecoins and firms like Fidelity and Stripe moving into the space. According to da Ponte, PYUSD’s new rewards won’t be tied to U.S. Federal Reserve rates and won’t be solely funded through the interest that the company generates on its reserves.