Paypal says it is looking into developing a dollar-backed stablecoin as payments giant boosts crypto efforts

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Paypal is looking into developing a dollar-backed stablecoin as the payments giant boosts its efforts in the cryptocurrency space.

The company confirmed the news to Bloomberg last Friday after a developer, Steve Moser, discovered the evidence inside PayPal's iPhone app. The Block was first to report in May 2021 that talks were in progress.

Moser told Bloomberg the project is called «PayPal Coin» based on the code and images.

A Paypal spokeswoman told Bloomberg the initiative was a result of a company hackathon within its blockchain, crypto, and digital currencies division.

A stablecoin is a type of cryptocurrency backed by an external asset, such as the US dollar. Among well-known stablecoins are those issued by Tether, Circle, and Binance, whose combined valuation has skyrocketed to $164 billion just from $11 billion two years ago, according to data by CoinMarketCap.

PayPal joins the ranks of Meta Platforms, formerly Facebook, in developing its own stablecoin. Facebook's stalled project is called Diem, rebranded from Libra, a blockchain-based payment system that has since hit a number of roadblocks. 

Since stablecoins have ballooned in size and become integral to the functioning of crypto markets, President Joe Biden's administration has been working with top economic advisors and senior regulators to propose rules to regulate them. Securities and Exchange Commission Chairman Gary Gensler in September 2021 compared stablecoins to poker chips at a casino.