PayPal’s PYUSD stablecoin, which was recently deployed on the Solana blockchain, includes a feature called “confidential transfers.”
The feature aims to provide enhanced privacy for users while maintaining transparency for regulatory purposes.
On May 29, PayPal made an official announcement regarding the deployment of its dollar-pegged stablecoin on Solana, after it was previously only available on the Ethereum blockchain.
What is PayPal’s “Confidential Transfers” Feature?
The introduction of “confidential transfers” allows merchants utilizing PYUSD to offer transactional confidentiality to their customers while still ensuring regulatory compliance.
This means that the transaction amounts can be concealed from public view, providing a level of privacy for users.
Udi Wertheimer, a prominent Bitcoin advocate, said in a post on X that PayPal users would have access to a feature similar to “confidential transactions” before Bitcoin developers implemented it.
“This sounds a lot like “confidential transactions,” a feature Bitcoin devs have been larping about for almost a decade but never built, and you’re telling me PayPal users will have it first? LOL,” he wrote.
ok this is wild
paypal just launched its PYUSD stablecoin on solana (yeah i know. yawn)
but it seems to have a privacy feature they call “Confidential Transfers” that hides the transaction amounts of transactions????
this sounds a lot like “confidential transactions”, a… pic.twitter.com/BMqvWTBoOC
— Udi | BIP-420 (@udiWertheimer) May 29, 2024
Mert Mumtaz, CEO of Helius Labs, said that PayPal’s expansion to Solana was not solely driven by the blockchain’s speed.
Mumtaz emphasized that Solana’s native support for confidential transfers and token programmability on Layer 1 is a game-changer.
The ability to execute confidential transfers on Solana offers significant advantages for PYUSD users seeking enhanced privacy features.
Solana Offers More Benefits For PYUSD
In addition to confidential transfers, Solana’s token extension standard, which complies with the SPL token standard, provides several benefits for PYUSD.
This includes reduced development and testing efforts, enterprise-ready capabilities that can be easily integrated, and enhanced flexibility.
The open standard of token extensions allows PYUSD to be used not only within the PayPal ecosystem but also with any compatible wallet, exchange, or library outside of PayPal.
PYUSD, launched in August 2023, is primarily backed by U.S. Treasury Reverse Repurchase Agreements, according to Paxos, the stablecoin’s issuer.
Its circulating supply has grown by 50% since the start of the year, and it currently has a 24-hour trading volume of approximately $18 million, as reported by CoinGecko.
Previously available exclusively on Ethereum, the Paxos Trust Company-issued stablecoin now has a total circulation of around $400 million, with a current supply of $5 million on the Solana blockchain, as indicated by Solana’s network explorer.
Notably, the stablecoin market, currently valued at over $140 billion, remains unregulated.
Last month, Senators Cynthia Lummis and Kirsten Gillibrand joined forces to propose a new bill aimed at regulating stablecoins.
Under the proposed legislation, payment stablecoin issuers would be subject to reserve and operational requirements, including the creation of subsidiaries dedicated to issuing stablecoins.
Senators Lummis and Gillibrand have previously introduced various bills addressing the digital assets market, with one bill last summer aiming to define decentralized finance and establish jurisdiction over crypto for federal agencies like the Commodity Futures Trading Commission.
Just recently, Singapore-based payments company Triple-A announced plans to integrate PayPal’s stablecoin into its list of supported tokens for customer payments.
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