PayPal Stablecoin Circulation Slumps 39% in March

PayPal's stablecoin, PayPal USD (PYUSD), experienced a significant circulation decline in March, dropping by 39% to $188.5 million. Despite a surge in cryptocurrency markets, PYUSD's circulation has been dropping since late February after reaching its peak of $312 million.

PayPal USD Stablecoin Circulation Witnesses Notable Decline in March

New York, New York - April 11, 2023

PayPal USD (PYUSD), a stablecoin co-issued by payment behemoth PayPal and blockchain infrastructure provider Paxos, has experienced a significant decrease in circulation during March 2023.

According to Paxos' most recent PayPal USD transparency report, the stablecoin's circulation plummeted to $188.5 million in March, representing a sharp 39% reduction compared to the previous month. Notably, PYUSD circulation stood at $304 million in February and $301 million in January, indicating a sustained downtrend.

As of March 29, the PayPal USD treasury held $14.9 million in United States Treasury bonds, with a notional value of approximately $14.8 million. Additionally, the current market value of PYUSD collateral in U.S. Treasury bond-collateralized reverse repurchase agreements amounted to $177.9 million, with a notional position value of around $174 million. The stablecoin's total net assets reached $192 million, while the notional position value stood at $189 million.

PayPal USD's market capitalization has been on a downward trajectory since late February, after reaching an all-time high of $312 million on February 26. Data from CoinGecko reveals a sustained decline since then.

Despite the overall rally in cryptocurrency markets, with Bitcoin (BTC) breaking all-time highs of over $73,000 on March 13, PYUSD circulation has continued to contract.

Cointelegraph reached out to Paxos for comment regarding the drop in PYUSD circulation but has yet to receive a response.

Launched in August 2023 through a partnership between PayPal and Paxos Trust, PayPal USD is designed for digital payments and Web3 applications. It maintains a 1:1 peg to the U.S. dollar and is backed by U.S. dollar deposits, short-term Treasurys, and other cash equivalents.

Within eight months of its launch, PYUSD has emerged as a significant player in the stablecoin market, ranking as the 13th largest stablecoin by market capitalization, surpassing both Paxos' Pax Dollar (USDP) and Gemini Dollar (GUSD), as per CoinGecko data.

However, PYUSD's market value still represents a relatively small fraction of the dominant Tether (USDT) stablecoin, which commands a market capitalization of over $106.6 billion at the time of writing. The total market capitalization of all stablecoins stood at approximately $155 billion.