PayPal's new stablecoin facing sluggish demand from crypto users, Nansen says

by Nathan Crooks

Companies • August 25, 2023, 3:18PM EDT

Published 1 minute earlier on

UPDATED: August 28, 2023, 4:42AM EDT

The Block

Quick Take

“On the surface there’s a lack of demand from crypto users for PYUSD when other alternatives exist,” Nansen said in a report.

PayPal's new stablecoin is off to a bit of a slow start, with data firm Nansen reporting that very few people are using and holding the PYUSD token in self-custody wallets.

"On the surface there's a lack of demand from crypto users for PYUSD when other alternatives exist," Nansen said in a report, suggesting this could be occurring because the payments giant is targeting a different demographic.

PayPal launched the stablecoin earlier this month in partnership with Paxos, but the fact that it's issued on the Ethereum blockchain has raised questions about just how useful it will be because of the high transaction fees associated with using the protocol.

'Smart money' holders

Nansen said that "smart money" holders seem to be avoiding the stablecoin so far, with Paxos still custodying more than 90% of PYUSD supply. Exchanges Kraken, Gate.io and Crypto.com, meanwhile, hold just over 7% of the supply.

Less than ten holders that aren't contracts or exchanges have balances of more than $1,000. The top holder in that category has less than $10,000 and bought the token after selling three different memecoins, according to Nansen.

PayPal did not immediately respond to a request for comment from The Block.

About Author

Nathan Crooks is the U.S managing editor at The Block, based in Miami. He was previously at Bloomberg News for 12 years, where he helmed coverage of South Florida after roles as a breaking news editor and bureau chief in Caracas, Venezuela. He's interviewed presidents, government ministers and CEOs, and, besides crypto, has covered major news events on the ground from earthquakes to hurricanes to the Chilean mine rescue in 2018. Nathan, a native of Clarion, Pennsylvania, holds a bachelor's degree from the University of Toronto, where he completed a specialist in political science, and an MBA from American University in Washington, D.C.