The New York State Department of Financial Services (NYDFS) has awarded PayPal Digital a Limited Purpose Trust Charter. This is the same trust charter that digital asset managers and some stablecoin issuers typically hold.
Last August, PayPal launched Big Tech's first PYUSD stablecoin. Technically, the issuer of the stablecoin is Paxos Trust Company, which also has a NYDFS Limited Trust Charter. Paxos has also been a partner for PayPal's crypto services since its launch. Therefore, the purpose of the trust charter could be to take over the management of the crypto assets of PayPal clients and bring stablecoin issuance in-house.
We contacted PayPal to confirm the purpose, but did not receive a response prior to publication.
The PYUSD stablecoin is still in its early stages, and the company recently made it available for cross-border payments on the Xoom app.
PYUSD currently has a market capitalization of just under $400 million, up from $190 million in early April. However, wallets associated with issuer Paxos account for more than $125 million of the balance, and these amounts may be held on behalf of PayPal. The top five wallets account for 71% of stablecoin balances. 17 wallets hold more than $1 million, accounting for 97% of their holdings.
The top five holders are Paxos, Crypto.com, Curve (DeFi), Defiance Capital, and Frax (DeFi). Currently, two crypto exchanges are the largest holders. Crypto.com has a balance of $103 million and Bullish has a balance of $23 million.
Meanwhile, last November, the SEC's Enforcement Division issued a subpoena requesting documents related to the issuance of the PYUSD stablecoin.
