PayPal to offer 3.7% yield on stablecoin balances this summer

PayPal plans to introduce a 3.7 percent yield on balances held in its PayPal USD (CRYPTO:PYUSD) stablecoin, according to a Bloomberg report dated April 23, 2025.

A PayPal representative told Bloomberg that the yield program aims to encourage greater use of PYUSD by offering monthly rewards paid in the stablecoin itself.

Users will be able to earn rewards that accrue daily and are paid monthly, with the flexibility to exchange PYUSD for fiat currency, spend it, or send it to others.

The program is expected to launch during the summer of 2025.

PYUSD reached a market capitalisation of $1 billion in mid-2024 but has since declined to approximately $873 million as of this report, based on CoinMarketCap data.

Tzahi Kanza, CEO of crypto investment firm Syndika, said that PayPal must ensure that offering interest does not cause PYUSD to be classified as a security.

“Stablecoins that don’t offer yield are generally not considered securities. However, yield-bearing stablecoins may fall under that classification,” he explained.

Kanza added that the main risk for users is the stablecoin losing its peg to the US dollar rather than the interest payments themselves.

PayPal has expanded its cryptocurrency offerings recently to include Chainlink (CRYPTO:LINK) and Solana (CRYPTO:SOL), allowing US users to buy, sell, and transfer these tokens.

“Companies like Stripe and PayPal integrating stablecoins is likely the primary catalyst for their growth,” stated Marc Boiron, CEO of Polygon Labs, who cited PayPal as a key driver behind the rapid growth of the stablecoin industry.

PYUSD was launched in August 2023 by Paxos Trust Company on behalf of PayPal and is backed one-to-one by cash deposits and short-term US Treasury notes, with regulatory oversight from the New York State Department of Financial Services.

Despite its growth, PYUSD’s market cap remains far below Tether’s USDT (CRYPTO:USDT), which stands at $145.3 billion.

“Tether’s strength lies in its market dominance — not in its regulatory compliance, transparency, or yield,” Kanza noted.

He suggested that focusing on compliance, transparency, and returns could be a strategic approach for PayPal to compete effectively.