PayPal is making a bold move in the stablecoin space, offering users up to 3.7% annual interest on holdings of its PYUSD stablecoin. Announced on 23 April, the initiative is set to launch this summer across both PayPal and Venmo platforms, targeting everyday users and signalling deeper integration of stablecoins into mainstream finance.

Rewarding Everyday Use

The new rewards programme will offer daily interest accruals with monthly payouts, aiming to encourage users to hold and use PYUSD in their digital transactions. This shift focuses on real-world utility over mere speculation, incentivising stablecoin adoption for purchases, peer-to-peer transfers, remittances, and more.

Users can spend PYUSD at millions of merchants, send it via PayPal or Venmo, and even use Xoom for fee-free remittances. The stablecoin is also transferable on-chain via Ethereum and Solana, supporting broader DeFi and wallet interoperability.

Part of a Bigger Vision

PayPal CEO Alex Chriss described the rewards plan as a step toward making PYUSD a central player in digital commerce and finance. He highlighted existing integrations of PYUSD into commerce, business payments, and crypto transactions, with new features like vendor payouts and bill payments on the horizon.

PYUSD, launched in 2023, has already gained ground with a current market valuation of $873 million, ranking it as the eighth-largest stablecoin globally. Its compatibility with Ethereum and Solana makes it suitable for use across multiple decentralised applications and wallets.

A Heated Stablecoin Race

PayPal’s strategy coincides with a surge in stablecoin innovation, as competitors like Robinhood explore launching their own tokens. Meanwhile, US lawmakers are working on regulatory frameworks with the STABLE Act and GENIUS Act, which aim to bring clarity to stablecoin issuance and backing.

According to Standard Chartered, these developments could expand the stablecoin market to $2 trillion by 2028, underlining the high stakes and growth potential in this sector.

Can PYUSD Challenge the Giants?

Despite its momentum, PYUSD still trails behind market leaders like Tether (USDT) with $145 billion in circulation, and Circle’s USDC at $62.7 billion. However, PayPal’s massive user base and integrated ecosystem offer a unique edge in driving stablecoin adoption beyond crypto-native circles.

By combining trusted branding, usability, and interest rewards, PayPal is positioning PYUSD as a bridge between traditional finance and the digital economy—a potential game-changer in the stablecoin race.