Research Summary
This report covers the launch of PayPal’s stablecoin (PYUSD), new guidelines from the Federal Reserve on banks’ interactions with cryptocurrencies, and the Y00ts NFT project’s transition from Polygon to Ethereum. The report also discusses the potential implications of these developments on the broader cryptocurrency and digital asset landscape.
Key Takeaways
PayPal’s Stablecoin Launch
- PayPal’s New Stablecoin: PayPal has launched a new U.S. dollar-denominated stablecoin, PYUSD, which is an ERC-20 token built on Ethereum and issued by Paxos Trust Company. The launch could boost the adoption of stablecoins due to PayPal’s high profile and wide reach.
- Regulatory Implications: The launch of PYUSD may advance efforts to create robust regulatory frameworks around stablecoins in the U.S. However, users should be aware of potential regulatory actions that could impact their use of the stablecoin.
- Centralized Control: Like other major stablecoins issued by a centralized provider, PYUSD transfers are wholly controlled by the issuer, meaning PayPal/Paxos could freeze PYUSD funds from user accounts.
Federal Reserve’s New Crypto Guidelines
- New Supervisory Regime: The Federal Reserve has published two notices focused on the supervision of member banks involved with cryptocurrencies. This includes a new supervisory program for “novel activities,” which includes cryptoasset activities.
- Impact on Banks: While these notices do not prohibit or approve any type of activity, they do formalize the Fed’s positions on these issues, potentially opening a path for banks to press the Fed to allow them to engage in these activities.
- Uncertain Future: The success of these new supervisory regimes in increasing crypto activity at banks will depend on how high the risk mitigation bar is set by the Fed.
Y00ts’ Blockchain Migration
- Moving to Ethereum: Y00ts, a leading Polygon NFT project, announced they will be migrating to Ethereum. This move highlights the ongoing challenges facing NFT projects trying to grow their communities during the bear market.
- Struggles on Polygon: Since moving to Polygon, Y00ts has struggled to onboard new collectors and generate substantial interest in Polygon NFTs more broadly.
- Ethereum’s Premium: Despite an easier purchasing process on other chains, collectors still place a premium on NFT collections based on Ethereum.
Actionable Insights
- Monitor Regulatory Developments: Given the potential impact of regulatory actions on the use of stablecoins like PYUSD, users and potential users should closely monitor regulatory developments in this area.
- Consider Blockchain Preferences: NFT projects considering a move to a different blockchain should take into account the preferences of collectors, who currently seem to place a premium on Ethereum-based collections.
- Investigate the Potential of Stablecoins: The launch of PYUSD by a high-profile company like PayPal could boost the adoption of stablecoins, making this an area worth investigating for those interested in digital assets.
