PayPal’s Stablecoin Playbook

Presented by Rain.

Host Justin Friedman sits down with Larry Wade to unpack how PayPal brought PYUSD from concept to real-world payments while balancing innovation, regulation, and consumer trust. The conversation explores PayPal’s early move into crypto, why on-chain transfers became critical for interoperability, and what changes when a global payments company shifts from supporting digital assets to issuing its own stablecoin.

Larry also breaks down the compliance and operational realities behind PYUSD, from regulatory oversight and reserve attestations to product-market fit and cross-border payments. The episode dives into how PayPal is thinking about merchant settlement, payouts, and reducing friction in global money movement, as well as why the company expanded beyond Ethereum to networks like Solana, Stellar, and Arbitrum as it builds toward mainstream stablecoin adoption.

Subscribe for more conversations on what it actually takes to bring tokenized money into the real world.

Connect with the Hosts & Guest

Justin Friedman: https://www.linkedin.com/in/justingfriedman/

Larry Wade: https://www.linkedin.com/in/larryswadejr/

About Crossing the Chasm

Crossing the Chasm is a special series with Rain focused on what it actually takes for stablecoins to become the default for everyday payments. Instead of rehashing benefits or highlighting pilots, the series breaks down the real work behind winning on Main Street, from upgrading payment rails and navigating regulation to embedding stablecoins into products people already use. Through conversations with builders and operators, we explore how tokenized money moves from early adoption to practical, widespread use across businesses and consumers.

Transcript

Intro

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Larry Wade 0:39

You can't mess with the PayPal mothership. So we had to methodically kind of build all of these products, hoping that regulation was able to also kind of catch up and that we could time it, you know, fairly accurately.

Justin Friedman 1:16

His company needs no introduction. Over the past generation, PayPal has solidified its essential role in global finance and e-commerce, responsible for money movement and merchant checkout solutions on every continent. Larry Wade arrived at crypto the way many professionals do, skeptically at first and eventually with boundless enthusiasm. Working as a consultant at KPMG, he was challenged by a business school classmate to read the Bitcoin white paper, which led to helping KPMG build a new blockchain risk and compliance practice. Five years ago, Larry made the jump to PayPal. Today, he leads regulatory relations and compliance for crypto, one of the world's most recognized payments companies, putting him at the center of key inflection points, such as the launch of PYUSD on Ethereum in 2023, its expansion to the Solana, Stellar, and Arbitrum blockchains, and positioning PayPal ahead of the Genius Act and its implementation,

Meet PayPal’s Crypto Compliance Lead

Justin Friedman 2:16

which is still currently unfolding. As a compliance officer, Larry argues that Rickor is a competitive mode. We're going to test that thesis today. Larry Wade, thanks for joining us on Crossing the Chasm.

Larry Wade 2:30

Justin, uh absolute pleasure to be here. Really excited for the conversation.

Justin Friedman 2:34

Awesome. Let's dive into it. PayPal first enabled its users to buy, sell, and hold crypto in 2020. As PayPal's regulator at the time at NYDFS, this felt like an early bet to me when few users were demanding crypto and there was no meaningful use case in payments, at least not in the US. So what was the internal conviction that drove that early bet for PayPal?

Larry Wade 3:00

Yeah, um it's interesting. And got to give credit to our one of our former CEOs, Dan Shulman, that he did see the vision and that ultimately the way PayPal revolutionized payments in the early days of the internet, uh, there was a bet that stable coin technology and blockchain technology and all the various benefits of smart contracts, et cetera, would help kind of uh bring in the new pipes needed for this new digital age. Now, what's interesting is that when you think about launching a stable coin uh within the PayPal ecosystem, there are a number of steps that you need to do. And you ultimately need to first be able to have the ability to buy, hold, and sell just normal everyday digital assets such as Bitcoin. So that was the first step, which ultimately was what was used to launch uh PYUSD. And it was a very uh kind of calculated multi-year approach to be able to do it.

Justin Friedman 3:56

Well, there's um meaningful difference between letting consumers hold Bitcoin and other crypto assets versus issuing your very own stable coin. So, can you talk to us a little bit more about that decision to build PYUSD, which is a pretty ambitious undertaking? What are you trying to solve with that? What does PYUSD accomplish that existing solutions don't for your users?

Larry Wade 4:23

Yeah, so let's take a step back. Why buy hold sell? And why was it Bitcoin, Ethereum, Bitcoin Cash, and Litecoin to start? Well, first, you had to be able to build uh the ability to start integrating wallet technology into the PayPal ecosystem. Remember, this is a closed two-sided network. And, you know, fun fact, we were actually told by a number of uh prominent alumni, not sure if you guys are ever going to be able to open the PayPal wallet to interact with the public blockchain, but with no good luck trying. Um, being able to have buy hold sell gave us a foundation to launch what was next, which was transfers. Another fun fact. So PayPal owns Venmo. For the years that these two companies have been under one umbrella, they never were able to talk, meaning I could not send value from Venmo to PayPal, PayPal to Venmo. When we implemented the ability to transfer on-chain for PayPal, and then subsequently to Venmo, the first transaction ever between PayPal and Venmo was actually a Bitcoin transaction. So now we're bringing real utility into our own ecosystem. But we couldn't get the transfers until we built buy, hold, sell. So it was the ability to buy, hold, sell, and now transfer, which were the core functionalities needed when you ultimately integrated stablecoin technology. Now, stablecoin technology is interesting because yes, the tech is wonderful. And it really is that kind of uh you know, marriage between web two and web three, i.e. fiat and the ability to operate on chain. But there were, especially at that time, there were a lot of regulatory considerations and also risk and compliance considerations. You can't mess with the PayPal mothership. So we had to methodically kind of build all of these products, hoping

Why PayPal Started With Crypto

Larry Wade 5:58

that regulation was able to also kind of catch up and that we could time it, you know, fairly accurately. Um, but again, it was very uh step by step, just given the world we were in at the time.

Justin Friedman 6:10

That's so interesting to me. What it sounds like is there was a kind of an approach of if it ain't broke, don't fix it, right? The core infrastructure is working fine. So let's not disturb that. And how do we turn to the blockchain to kind of bolt up on top to create that interoperability?

Larry Wade 6:25

And not only don't deserve it, I can, right? We have a public company that is, you know, a trusted brand. Um, and we could not hurt our customers or partners. So I I liken it in my mind to we are building this brand new bridge while simultaneously ensuring that the existing bridge is being worked on so that way cars can go across. And then ultimately, you'll probably have both. And then as time goes on, you know, uh it will probably merge and things of that nature just to what's the most efficient route. But yeah, we could not mess up the core business and we had to build these rails while simultaneously doing that, which is a lot of fun. It's a great challenge. Justin, I can tell you, I've never had one day that's the same since I started on this journey. And if you remember years ago, not only were we in a place of uh lots of innovation and trying new things, we were in an interesting regulatory climate as well. Um, so yeah, it's been a journey.

Justin Friedman 7:21

Yeah, well, let's talk a little more about that. So PYUSD launched under the trust charter held by Pactos, which was supervised at the time by New York's Department of Financial Services. And this was all before any federal framework for stablecoins existed. For listeners who may not know what NYBFS oversight entails for a stablecoin issuer, can you describe what that meant in practice? Absolutely.

Larry Wade 7:48

So I I like to I I call this my my zip code method, right? So when you're dealing with innovation, you have to be comfortable with ambiguity, a bit of grayness, and the ability to pivot very quickly. So if you have to operate in that kind of high-stakes environment, how do you do it in a controlled manner where you can still push forward on the innovation? One of the first things you want to do is figure out from a minimum requirement standpoint, what regulation, directly or even indirectly, is applicable. That way you have something to anchor to. So you want best practices and risk management. You want what is that regulatory regime that you can kind of, again, use as your anchor. And then from there, how do you build out risk-based solutions that can be reperformed and unwound? Interestingly enough, uh, the New York Department of Financial Services actually created the first crypto uh regime in the United States, which is called the Bit License. So the Bit license side of the house, and then you have the trust license side of the house. So PayPal, we now have a trust as well, um, but we went the bit license side because that pertained more to the money transmission and the activity just around commerce, et cetera. And Paxos is a trust company because that gave uh institutions the ability to issue stable coins, custody, things of that nature. So to your point, Paxos is our issuer of our branded stable coin. And at the time, DFS regulated both of us. Paxos is now under the OCC, and PYUSC is the largest federally regulated stable coin.

Justin Friedman 9:18

Does that create any complications for you with your issuer becoming a federally supervised entity and PayPal staying under NYDFS jurisdiction? It's a great question.

Larry Wade 9:29

Something I get asked a lot by our board members, just in general. Um, but I would say that this entire uh journey has been complicated. So it's just something that we deal with. Um Taxos moving to the federal oversight to me gives uh you know just additional comfort, right? They were able to kind of pass what is needed to actually be fully uh you know approved. Um and again, whether it's DFS on the trust side or the OCC, there is rigor from attestations of reserves and and from third parties and stock reports, et cetera, that are required that ultimately I'm managing the risk

Building PYUSD Step By Step

Larry Wade 10:05

in a similar way, but we do just have a new regulator on the Paxwell side that we need to account for. But all in all, it is still complicated. Um, we're getting better every day. It was never not gonna be. I mean, because I mean, think about it, we have genius, but rulemaking for genius isn't there yet. So, you know, once we have a regime, you still need the rules. And then you have clarity, which is kind of working its way, you know, through uh, you know, Congress, but that too will need rulemaking if that's able to pass. So no matter what, you're operating in a dynamic environment, and again, it's a risk-based approach, trying to take the kind of conservative regime uh view and then kind of moving forward. And if there's something we need to unwind, we'll do that.

Justin Friedman 10:48

So I understand that PYUSD's early growth was fairly modest. The token existed, and you built a rigorous compliance infrastructure, but adoption didn't necessarily come right away. So, what did the search for product market fit look like? And can you talk a little bit about the numbers and how has usage grown?

Larry Wade 11:11

Yeah, so this is so being PayPal, it's a gift and a curse. Because at the end of the day, we have this brand that is trusted, we have this two-sided network, we have these 400 million wallets around the world. So we have a beautiful ecosystem that we can bring utility to. The curse to that is that we do have a higher burden, again, from just our core business and just how we are perceived by regulators and partners. So when PYUSD launched, we did launch from zero. So all of the activity to build the market cap, to build liquidity pools, et cetera, we had to kind of start from the beginning because PayPal entering the stablecoin uh space brought legitimacy and just kind of working with various partners and things of that nature. Um, our our promise was that it would be a very controlled rollout. So the market saw it as why are they so slow? But we had to do it because again, we were the first major fintech to get into the space. And you know, we had to make sure that we were able to test and learn, provide feedback to various regulatory partners and really do things correctly. Now, what you're starting to see is that flywheel coming in the network effects. But interestingly enough, out of the $350 billion in stablecoin flows, only about 1% of it is traditional kind of payments in commerce. So it's still fairly small. So what you had to do first is kind of grow liquidity and utility in the Web3 world and DeFi and things of that nature, and then simultaneously work with partners in TradFi, get customers more comfortable holding digital assets. That way, maybe now they are sending it cross-border. Maybe now a merchant partner is provisioning for crypto and wants to take advantage of our pay-in-pay with crypto product or our payout product with hyperwallet. But again, it's very complicated because this is technology, but it is financial services. And when you are dealing with financial services, there's just a different risk appetite from participants, from their boards, from their orderistic compliance committees, from their investors, et cetera. So again, everything we have to do has been very thoughtful. Um, it at times does feel a bit slow. So we are putting off but on the gas right now, as you can see, you know, from announcing the 70 countries to things of that nature. Um, but again, we we just had to take a different approach than just needed web three organizations have.

Justin Friedman 13:27

So um let's talk about that. Um, tell me about that recent announcement from March that uh you've expanded coverage to 70 countries around the world. Uh, what does that mean both from a market entry standpoint, and also um I'd love to understand what it took to build up to that, right?

Regulation As The Product Constraint

Justin Friedman 13:45

What did you have to put in place as a compliance leader to be ready for that?

Larry Wade 13:49

It was extremely challenging. And I've said this before, and I'm probably gonna sound like a broken record. The engineering and the product build, there are phenomenal team members right now throughout the industry who are building. That's actually not the hardest part anymore. It is now the fact that you have this technology that has utility, but how do you bring it to a bespoke market? And every market's regulator and government has a different view, has a different mandate, and you may not have necessarily licenses there. And how do you do all of that? So, what we had to do is say, one, how do we have our, how do we facilitate our money transmission business in those parts of the world? Interestingly enough, when we were going through this, and this was about a two-year process to get to these, because we had to get our digital payment tokens license from the Monetary Authority of Singapore, which is our our primary regulator for our international headquarters. We had to work and ensure that all of the various markets, from a legal perspective, can we bring digital assets there? Is it digital assets, is that viewed differently than stable coins? For example, you take Mika, which was outside of the 70, that's a different one. But you know, a stable coin, being Mika compliant stable coin and a Mika compliant, you know, custodian exchange, those are two different uh permissions. So you have to go through this entire process to understand what does it take to bring a stable coin to Columbia? Okay, what does it take to bring to this country? And are they more pro-merchant or consumer? We had to go through that entire analysis, work closely with my market compliance teammates, and then we had to figure out what PayPal actually have there now. Um so it was fascinating to find out that in certain markets, yes, we were there, but because of certain uh you know uh regulatory uh you know requirements, et cetera, maybe there was send-only functionality. So bringing PYUSD to these markets was pure utility. It was the ability to bring almost a tokenized version of PayPal balance to markets where previously balance couldn't be held, and now you can hold, send, spend, and send and earn. So now we're really, really lighting up uh you know wallets in other parts of the world in our ecosystem that we couldn't before. But to answer your question, extremely challenging. Long nights with our Singapore colleagues, um, uh lots of conversations with internal and external council, but also one of the most exhilarating journeys of my career. Um, and we're just getting started on this because we feel that being able to bring PYUSD to our wallets around the world, kind of be that trusted on and off ramp for fiat to stablecoin transactions for merchants and consumers, we really have a right to win there. So we're leaning in uh and trying to activate. But again, it's very bespoke to the market. And from a red chain management perspective, have to be very dynamic. Because at any given time, there may be a new proposed rulemaking, and you may need to deprecate the business, or you may need to adjust, or you may need to get licensing where previously there was no licensing required. So it's very dynamic to manage.

Justin Friedman 16:49

So does that mean that you've been able to achieve an equal or similar functionality across all of those 70 markets? Um, what does that mean in practice? If I'm a user sitting in the US and I have a PayPal wallet, um, what um what do I experience in practice being able to send and receive to users across those 70 countries? And I ask this because I years ago, I'm I moved abroad, and I actually naively expected that I would be able to use my PayPal wallet to send and receive with the locals. And I was shocked to learn that in fact they were completely not interoperable. Now, this was years ago, but I I'm I'm really eager to learn how you solve for that problem.

Larry Wade 17:39

Excellent question. Okay. So it's again multi-step. Um, so first, which countries do we want to now bring in scope? So you heard those that 70. Within that 70, there is a flavor of functionality. So the first 10 that we rolled out had the ability to hold PayPal balance, sweep into your local uh bank via your local currency. So it had more functionality akin to the US, hence why we went there first. There are the other approximately 60 markets where you know you couldn't really hold the balance or you couldn't sweep it into the bank account. So the first thing we need to do is we have to have each one of those markets be able to hold PYUSD. So that ramp is near complete. Check. So then what being able to then transfer in and out, even if we don't have the bank functionality just yet, you could still transfer PYUSD in, earn rewards, be able to transfer it out, be able to kind of have a tokenized version of a PayPal balance in your wallet. Okay, working through that. Ultimately, where we're going is to be able to have all of those wallets, to be able to hold PYUSD, five PYUSD, meaning that we have the ability to on and off ramp into the banking system,

From NYDFS To Federal Oversight

Larry Wade 18:55

um, send it, spend it, but you know, check our crypto, things of that nature, and then obviously earn you know with rewards. So we feel we have a great roadmap to do that. And it's your question, any of those wallets where that user is provisioned for transfers will be able to send PYUSD. So that will solve that problem that you had before. And it's funny because um when I uh got married, um, my wife and I on honeymoon, we went to Africa and uh, you know, did Safari and all that fun stuff, and we wanted to do another photo shoot in in Cape Town. And we needed to send a deposit to the photographer. So went into my bank, and my banker literally said, I feel so terrible because the wire fee is more than the deposit when we do the conversion. She's like, She was like, Do you have PayPal? And I was like, Well, funny enough, yes, I have PayPal. Um, so we were able to kind of do it. Yeah. So this is before the stable coin, but it did take a couple of days to settle, but we were be able to use the uh PayPal in order to give the deposit to the photographer. I'm super excited because now, let's say this photographer, uh, you know, crypto is is in that country, that photographer is able to be a merchant account that can you know uh be provisioned for crypto. I could have sent PYUSD to that merchant account and it would have said it instantly. And when you think of working capital and days of not being able to settle, especially for a small business owner, that is meaningful. So one of the reasons why I really, really get excited about what we're doing is because I can trace what our brilliant product and engineering team is doing all the way down to how it impacts that customer sending funds back home to the Philippines, or that that small business owner getting that deposit from me in New York for for uh you know a photo shoot. So uh, you know, still very early days, but we are closer than ever. And I think that with Genius passing, that was the game changer, to be quite honest with you. Because again, AI, you can kind of see, oh, all right, before uh we didn't have the ability to use large language models, and now I can do something really interesting with ChatGBT or Claude. When it comes to value transfer, especially in the US, it kind of works. Even if it doesn't work as efficiently as it can, does, unless you're really sending money cross-border and things of that nature, things kind of work here. That need to enhance the pipes that have faster, cheaper, near-instant finality, programmability. Most people on a day-to-day basis don't think about that. So, you know, being able to kind of build those pipes to get uh real use cases to the end users, um, it just really excites me. And now that again, genius has passed, it's given uh TragFis and other merchants the ability to now lean in and start to really explore and test in a way where previously they couldn't, because again, you can't you can't mess with the money. So um it's Early days, but we're really excited.

Justin Friedman 22:02

So you've talked a bit about peer-to-peer payments, and uh even in the case of that photographer in South Africa, you know, this is an individual that you were interacting with and you know able to move money through um sort of a direct means. But I'm curious about checkout and what this means for e-commerce broadly across the world.

Larry Wade 22:25

Yeah. Yeah. So I mean, when you think of just again, the the cost

Product Market Fit And Early Growth

Larry Wade 22:30

of transactions, and then also again, depending on the flow, pre-funding and and you know, FX, there's just a lot to consider when you're talking about global commerce. So what we want to be able to do is provide uh additional payment methods for consumers to check out, um, for merchants to settle. Um, and then hopefully, you know, if you have a better mouth trap, well, then you know, hopefully you'll get that adoption. So, right now you have, for example, you know, checkout with crypto, where if you are, you are you have a PayPal account, your provision for crypto, whichever assets you have in your PayPal wallet, um, you could check out with merchants to buy sneakers from Nike, et cetera. That's in play today. Pay with crypto is actually really interesting because that is more akin to our umbranded checkout flow, where you don't necessarily have to be a PayPal customer, but that merchant is a PayPal customer. And now we're allowing that merchant to be able to accept various uh you know digital assets, but ultimately being converted into PYUSD and us settling with that merchant in fiat or PYUSD. That way they're either getting the fiat or or the stable point. And you don't necessarily have to worry about the user who had Ethereum in their self-hostile wallet, and they wanted to use that to check out at Target. So again, that's another form of checkout. But then also once you start getting into kind of payouts and disbursements, there's so many use cases to free up capital, lower the cost of transactions, uh, you know, address the issues you have around holidays, weekends, non-banking hours, um, and and it's just uh a plethora of ways we can we can start to bring utility there.

Justin Friedman 24:09

So when you think about PYUSD as a stable coin, how essential to the economics of making this work is your ability to pay those rewards that you talked about? This is something that's being litigated, particularly in the US, um, but perhaps in other jurisdictions around the world. And depending on where it lands, you may be limited in your ability to actually reward users for holding a balance, for moving money in different contexts. So is that sort of a nice to have or is that a need to have?

Larry Wade 24:45

Yeah, it's a great question. Um obviously we we'd love to be able to maintain rewards. And with that said, this technology with or without rewards still has utility. And it's our job to continue to move forward, um, you know, assist where needed as the regulations evolve. But uh when you talk faster, cheaper, near informality, and programmability, there's utility there. Um so for example, if I'm able to uh you know hold PYUSD in my PayPal wallet here in New York and send PYUSD to my cousin in Columbia and happen instantly with instant settlement, and maybe it was on the Solana chain and you know, and because it's within the PayPal ecosystem, there's no cost to do that. That's a benefit. Now, if you're able to also now hold PYUSD and gain rewards, that just helps with the flywheel and the stickiness. But ultimately, that's that's that's an advantage. If I am, for example, in our Zoom cross-border payments product, when you are dealing with disbursement partners around the world, you have to pre-fund in order to uh you know have the ability for that real-time payment to appear. But really, there's a lot of pre-funding around the world. Well, utilizing PYUSD, and we've done this with two partners already, to say, all right, we are going to settle with you in PYUSD in near real time rather than needing to pre-fund. And

Expanding PYUSD To 70 Countries

Larry Wade 26:10

now, by doing that, it lowers the cost for us. It allowed, it lowers the cost for you. You can now pass on that benefit to the various customers, and that's real utility as well. Now, if that merchant can hold PYUSD and earn rewards, again, that's more benefit, but there was benefit even without that. So we feel that what we need to do is start to just unlock that flywheel, and meaning get you consumers comfortable with it, start to understand the uses. It's not a magic bullet for everything. Uh, bring utility to it. How can we now, for example, in our Zoom product, if you funded your cross-border payment transaction with PYUSD, it was free to fund it with PYUSD. That's actual benefit to the customer. So try how do we do things like that? And then ultimately, as customers become more comfortable, they use it for cross-border payments, they use it for various activities, merchants, certain merchants lean in, they start getting more comfortable with settlement, et cetera. Other merchants want to come, the flyer wall comes, and now we we kind of start having some traction. So with or without rewards, we feel there is there is utility, but obviously we want to maintain rewards.

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Justin Friedman 27:34

So you mentioned that in the past there were strict firewalls between the PayPal network, the Venmo network. I presume the same thing is true for Zoom, which is your international remittance product. Are those walls coming down such that it almost doesn't matter now where I start as a sender and where my receiver sits? Is there, are you achieving interoperability throughout these PayPal-owned platforms that kind of collapse those differentiations? Yeah.

Larry Wade 28:05

Um so take Venmo on PayPal. Vimmo is only in the US. So that was that one's easy. You get provision for crypto on Vimmo, you get provision for crypto on PayPal, you can send back and forth all throughout the PayPal ecosystem. Certain merchants are provision for crypto. We're starting to ramp that up. Those merchants that are provisioned for crypto, they'll be able to participate as well. Um, but then all the merchants have the ability to uh have the the tech out with crypto because they're receiving fiat and NASLA. Um but outside of the US, it goes back to our earlier part of our conversation around bringing the utility to these wallets. That way now we start to have that web there. And that 70 was was was major. Um we are in the UK now. There's a new regime coming forth in the UK that we're working with the FDA to get up to speed on. And we don't have uh transfers in the UK yet, but again, that's all together with uplifting for the new regime and then being able to bring you know transfers. Though, interestingly enough, you can buy PYUSD in the UK. We actually see some meaningful adoption there. So there are uh customers in the UK who are just purchasing PYUSD and just kind of holding it, which has been been interesting to see. Um obviously you you have Mika and that'll be able to unlock the EU. Once we're able to have the ability to hold PYUSD and transfer on-chain, that entire ecosystem is now open. And you can send uh, and if it's within our actual ecosystem, you know, you're sending it for free. You can avoid having the the on-chain fees and things of that nature.

Justin Friedman 29:42

So you mentioned those early adopters in the UK. Most stablecoin users today are crypto native, but PayPal's base of those 400 million across the world are not. So, how do you design a product and a compliance framework for users who don't know what a wallet is, don't care which blockchain it runs on, and they just want it to work.

Larry Wade 30:07

To answer your question, that is something we think about every day. You never really know which use case is gonna catch fire. You want to do your your market diligence, uh, you know, your voice for the customer work. But where are some pain points right now? You you we mentioned it earlier. Think of cross-border payments, being able to send cross-border, being able to settle cross-border. If you are a company that pays out to influencers in Peru, right? Being able to do that in a cheaper uh way, maybe then you know ACH. We're trying to look at those uh flows where there is friction and cost and where timeliness matters, and trying to integrate it there, even internally. We've done a number of internal uh treasury dividend uh disbursements where you know something that might have taken days and wires, we're able to use PYUST within the overall PayPal treasury ecosystem. Um, but uh we don't necessarily know where the magic's gonna happen, but we don't think it necessarily has to be net new. The pain points that customers have today, if we can reduce them, our hope is that they'll lean in and start to utilize the products that we're building, and then from there, um that network effect will grow. So uh it's an interesting challenge uh to say the least. But we're on it every day.

Justin Friedman 31:36

So to make this a little more complicated, PYUSD

Checkout Payouts And Rewards Economics

Justin Friedman 31:40

first launched on Ethereum and then expanded to Solana and Stellar and Arbitrum. So each of these networks probably serves a different use case and a different user. What's the logic behind this multi-chain strategy?

Larry Wade 31:56

Yeah, and and you know, credits to uh Jose, who was uh you know the original CEO of the crypto group. Uh, he said, we want to go where the developers are building and we're gonna go open source. And ultimately, the developer ecosystem is one of the beauties of Web3, right? That's the read-write own. I always say, who extracted value from TCP IP? Right? That was a very important protocol, but the developers and the early adopters were unable to extract any value. Whereas in Web3, if you're an early adopter of securing the network, building applications on the network, like a Solana, Ethereum, et cetera, you can now participate as that network grows. So we wanted to, we have a very robust, not only coin listing policy that takes into account the chains for you know just the bearer assets, but then also that analysis for any kind of new chain for PYUSD. We don't want to have, you know, hundreds of chains, but we want to have chains where there's a robust developer ecosystem, there's a use case that that ecosystem is trying to attack, whether it's you know, cost and speed of payments, um, the ability for smart contracts, things of that nature. Um, maybe it's you know roll-ups and et cetera. Um, but um, it's a thoughtful conversation with our our product and business development team members, um, paying attention to the ecosystem and trying to kind of listen to our to our customers as well. But we don't want thousands of teams. We don't think we need that. Um, you know, some core layer ones and twos um are probably gonna suffice.

Justin Friedman 33:27

Great. All right, here's my last question. PYUSD is now a $4 billion stable coin issued by a federally regulated entity, and it's embedded in one of the largest consumer payments networks on the planet. That is relatively small in the universe of stable coins today, but uh it shows potential. So, what does escape velocity look like? Five years from now, how do you measure success?

Larry Wade 33:57

Well, again, we are looking at transaction volume first. We want real utility. Market cap is great, and market cap is a sign of use, of network adoption, liquidity, awesome. But how is PYUSD being used? So without being too precise, I mentioned that approximately 1% of stablecoin flows are in payments, helping to grow that number, you know, obviously north of that 1%. That would be be meaningful. Um having a market cap, you know, that puts us in that, you know, top one, two, three uh stable coins, obviously very important as well. Again, from a liquidity standpoint, from a trust, um when you're working with with Trad5s, maybe, and there's big flows that they need settled, you do need a certain market cap for that. Um but but ultimately being able to have PYUSD in flows where you're getting benefits that you don't even know. PYUSD where you are seeing the benefit of maybe holding PYUSD in your PayPal wallet rather than even converting back into your local fiat, and being able to kind of just increase the velocity of transactions and

Multi-Chain Strategy And Success Metrics

Larry Wade 35:05

payments in a meaningful way that is faster and cheaper. Um that that really is what we're looking to do. We do that, we feel that uh, you know, we'll have a great story to tell and we'll be bringing some benefits to the market.

Justin Friedman 35:20

Well, thanks, Larry. And thanks to our listeners for tuning in for this episode of Crossing the Chasm. Please subscribe wherever you listen to podcasts and join us as we continue exploring what it takes to bring stable coins into the real world. Until next time.