The Paypal we all know and love(sarcasm) is back at it again.
Paypal launched their new stablecoin PYUSD about a week ago to a somewhat quiet launch, although this may be expected with the massive volatility crypto markets and seeming sell pressure are seeing.
[Word salad incoming] They describe it as “PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value…send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets.”
But the important things are always what they don't say rather than what's in your face. So I took a look at Paypal's terms and conditions. Here is where the real facts come out.
In it they say:
You may convert PYUSD to a different Crypto Asset, or convert a different Crypto Asset to PYUSD. At this time, you may not convert a Crypto Asset for another Crypto Asset unless one of those Crypto Assets is PYUSD.
What this is saying is that if you have BTC and want to sell for USDT or have USDT and want to buy BTC, you cannot do that. You must first sell BTC to PYUSD and then use PYUSD to sell to USDT. Or buy PYUSD using USDT and then buy BTC using PYUSD.
Essentially you have to go through PYUSD as an intermediary for every single transaction.A great way to push adoption for PYUSD. Every single transaction requires an extra transaction – one that involves PYUSD. And what does this mean? Double the trade fees for Paypal.
And these are those fees:
You are paying 3% every time you want to buy/sell/switch from one cryptocurrency to another. Yikes.
And somehow Paypal makes these fees even worse as they say:
Paypal charges a spread on the prices you see on their platform such that the prices on Paypal will be different(higher) than what you see on regular crypto platforms that don't use a middleman exchange/issuer. Another Yikes.
So double the fees are bad, but then there are hidden fees in the spread as well. But also by forcing relevancy of their stablecoin, they create yet another money-making avenue for platforms/individuals who use Paypal and/or cryptocurrencies in general to
- Buy their stablecoin that they simply print basically for free
- Loan their stablecoin to that platform's customers' customer the same way you can trade using margin on USDT which they gain interest income
And considering the decision months ago whereby Paypal changed their terms of service such that they charge customers a large fee if Paypal's disagrees with any social media content any of the users may post, the long and short of it is probably don't use Paypal.