Last updated: July 11, 2026
PayPal USD, or PYUSD, is a U.S. dollar-denominated stablecoin issued by Paxos Trust Company, N.A., not PayPal itself. PayPal and Venmo support the token as part of their crypto services, while Paxos manages its issuance, direct redemption and reserve assets.
PYUSD is designed to maintain a value close to $1. Eligible PayPal users buy or sell it through PayPal, while eligible Paxos customers can redeem it directly with the issuer. Holding PYUSD in a wallet does not automatically create a direct redemption right with Paxos.
For readers new to dollar-linked crypto assets, our guide to stablecoins explains how this broader category works.
How PYUSD works
PayPal announced PYUSD on August 7, 2023 and identified Paxos as the issuer. PayPal and Venmo provide eligible users with account-based access, while Paxos controls the underlying stablecoin and its direct redemption process.
According to PayPal’s current cryptocurrency terms, a supported Crypto Account can buy or sell PYUSD at $1 per token. When that happens, PayPal Digital satisfies the order by buying PYUSD from or selling it to Paxos.
Paxos’s stablecoin terms say only customers may purchase or redeem its stablecoins directly. Eligible customers can buy on a one-for-one basis. For redemption, the customer sends PYUSD to the address assigned to the account, and Paxos credits the corresponding U.S. dollar amount after applicable checks.
Paxos says it holds one dollar or an equivalent amount of permitted dollar assets for every stablecoin it has issued and that remains in circulation. That reserve commitment, together with one-for-one issuance and redemption for eligible customers, connects the token supply to its dollar reference. It does not determine the price quoted by an unrelated marketplace.
What backs PYUSD?
PayPal’s terms say Paxos must back PYUSD with an equivalent amount of U.S. dollar bank deposits, U.S. Treasuries and U.S. Treasury reverse repurchase agreements held in custody for PYUSD holders. Paxos’s terms also say the assets backing its U.S. dollar stablecoins are held in segregated accounts apart from corporate funds on behalf of customer and non-customer token holders.
The latest independent report reviewed for this article covers two dates in May 2026. For May 29, Paxos reported 3,019,072,414 redeemable PYUSD and $3,030,833,747 in redemption assets.
The reported assets consisted of:
- $262,423,747 in cash; and
- $2,768,410,000 in repurchase agreements.
The report listed no government money-market funds or direct U.S. Treasury obligations at that date. These figures describe the portfolio at a specific point in time, not a balance that should be assumed to remain unchanged.
Is the PYUSD reserve report an audit?
KPMG examined Paxos management’s assertion about redeemable PYUSD, the composition of redemption assets and the comparison between the two as of May 11 and May 29, 2026. KPMG said the assertion was fairly stated in all material respects.
The May 2026 PYUSD Redemption Assets Report is an independent examination of management’s assertion at the stated dates. It is not continuous verification of every part of Paxos or a full audit of the company’s complete financial statements. KPMG also said website information referenced by management was outside its examination procedures.
Paxos explains on its PYUSD transparency page that it publishes two different documents. Paxos releases its own portfolio-composition reports shortly after month-end, while independent accounting firms issue separate attestation reports. KPMG has issued reports posted from February 28, 2025 onward.
What can people do with PYUSD?
PayPal says eligible users can buy, sell, hold and transfer PYUSD through PayPal or Venmo. Users may send it to another person within supported PayPal services or transfer it to an external wallet on a supported network. At checkout, PayPal can sell PYUSD to fund a purchase, and users may convert between PYUSD and other supported cryptocurrencies.
The company’s PYUSD help page lists no PayPal fee to buy, sell, hold or send PYUSD. Conversion fees and blockchain network fees may still apply. PayPal also offers rewards to some eligible users, but the rate is variable and displayed in the PayPal app rather than guaranteed.
In March 2026, PayPal announced PYUSD availability across 70 markets. The company said users in newly supported markets could buy, hold, send and receive the token. Availability still varies with local rules, account type and eligibility, and rewards are not offered in every market.
The practical result is that PYUSD can serve as a dollar-linked balance within supported PayPal services and as a blockchain token in compatible wallets. The exact functions available to a particular user depend on location, account access and network support.
Which blockchains support PYUSD?
PayPal’s May 2026 terms list four supported PYUSD networks:
- Ethereum
- Solana
- Arbitrum
- Stellar
Paxos’s May 29 report also listed natively minted PYUSD on Ethereum, Solana, Arbitrum One and Stellar. That is a material change from the token’s original Ethereum-only launch and from older explanations that mention only Ethereum and Solana.
Network selection is not a minor detail. PayPal warns users to select the supported PYUSD blockchain and a wallet address designated for that network. Using an incompatible address can result in irreversible loss. Users should confirm current network support inside PayPal or the receiving wallet before transferring funds.
What are the risks and limitations of PYUSD?
PYUSD’s reserve structure does not remove every risk involved in holding or transferring the token.
No deposit insurance for token holders
PayPal’s terms state that crypto assets in its Crypto Accounts are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or another public or private insurer. Paxos may hold reserve dollars in insured bank accounts, but that does not provide FDIC or SIPC coverage to an individual token holder.
Transfer and network risk
Blockchain transfers can be irreversible. The wrong network or destination address can lead to permanent loss, and Paxos says it does not control supported blockchains or guarantee their security, functionality or availability. It also does not guarantee third-party wallet or software providers.
Issuer and platform restrictions
Access depends on intermediaries and their terms. PayPal says it may stop supporting PYUSD and does not guarantee Paxos’s performance or obligations. Paxos can restrict direct services based on jurisdiction, customer status, law and compliance controls.
Market-price risk
The $1 purchase and redemption mechanisms described by PayPal and Paxos do not guarantee that every unrelated marketplace will quote PYUSD at exactly $1 at all times.
Readers researching other reserve-backed dollar tokens can also review our separate guides to USDC and Tether USDT. Those pages explain their own issuers, reserves and redemption arrangements without treating the three products as interchangeable.
Paxos’s regulatory history
In August 2025, the New York Department of Financial Services announced a $26.5 million penalty against Paxos and required another $22 million investment in its compliance program. The findings concerned Paxos’s former Binance/BUSD relationship and historical compliance deficiencies, not PYUSD reserve assets.
