Financial technology firm PayPal (PYPL) is offering consumers an annual interest rate of 3.7% on their stablecoin holdings with the company.
Moving forward, customers will earn a yield of 3.7% on the PayPal USD stablecoin (PYUSD).
The interest payments can be used for transacting with other users on the platform, funding international transfers, exchanging currencies, and making purchases with PayPal merchants.
PayPal launched its stablecoin in 2023, making it one of the first financial institutions to launch a U.S. dollar-backed stablecoin.
A stablecoin is a cryptocurrency whose value is pegged to an underlying asset, typically the U.S. dollar or price of gold.
The high interest rate is being offered as PayPal tries to grow adoption of its stablecoin.
Currently, PayPal’s USD stablecoin makes up less than 1% of the market that is dominated by Tether’s’ USDT (USDT) and Circle’s USDC (USDC) products.
Stablecoins are watched closely for evidence of demand, liquidity, and activity in the cryptocurrency market.
Stablecoins that earn interest have become increasingly popular among crypto enthusiasts.
The stock of PayPal has declined 28% this year to trade at $62.46 U.S. per share.
