Stablecoin wars

Welcome back. As of Friday, SBF is behind bars. He had his bail revoked by a judge for alleged witness tampering…and using a VPN to watch a football game. SBF’s new home is a Brooklyn detention center, which the judge remarked was “not on anyone’s list of five-star facilities."

Today: PayPal’s big crypto move, Coinbase’s promising blockchain launch, and Worldcoin’s growing regulatory problem. Let’s go.

—Angelina

PYUSD Is No Joke

Global payments giant PayPal lit up the crypto world by announcing its own stablecoin, PayPalUSD (PYUSD), last Monday. PayPal has long flirted with crypto, but this makes it the first major TradFi institution to issue its own stablecoin.

In a nutshell:

• PYUSD is a dollar-pegged stablecoin fully backed by U.S. dollar deposits, short-term treasury bills, and similar cash equivalents. It can be redeemed 1:1 for U.S. dollars.

• The Ethereum-based token is issued by crypto services firm Paxos and will initially roll out to U.S. customers on PayPal and Venmo only.

• Customers who purchase PYUSD will be able to transfer it between PayPal accounts and compatible external wallets, use it to fund PayPal purchases, and convert it to any of PayPal's supported cryptocurrencies.

Something to keep in mind: PYUSD isn’t really living crypto’s vision of a decentralized, borderless, uncensorable stablecoin. Rolling out PYUSD through Venmo is effectively launching a new way for banked Americans to transact with some digital representation of the U.S. dollar, which doesn’t make it that different from PayPal’s other products.

Where does this leave Tether and Circle? If PYUSD becomes as popular as the current hype suggests, both USDT and USDC could face a strong new competitor. PYUSD is coming for…

1. Circle’s crown as the regulated and transparent stablecoin, and

2. Tether’s crown as crypto’s No. 1 stablecoin.

Zoom out: The launch of PYUSD fits perfectly into this year’s theme of TradFi giants entering crypto—arguably a positive development considering that companies like PayPal and BlackRock are in the position to push for crypto legislation in a way that crypto-native firms simply can’t.

PayPal‘s move also arrives during a turning point in U.S. crypto legislation—Congress actually has a stablecoin bill that made it through the initial committee stage in the House of Representatives for the first time ever.

All About That Base

Coinbase became the first publicly traded company with its own decentralized blockchain with last week’s launch of its new Base network. Base also marks the exchange’s official entrance into DeFi.

The details: Base is a layer 2 (L2) network built on top of Ethereum that makes it easy for devs to build decentralized apps and protocols with access to Coinbase’s products, users, and tools. The goal? To accelerate global DeFi and onboard the next billion users to the crypto economy.

• Base has been in beta since July.

• Prior to its public debut, Base already had $139 million of deposits locked into apps and protocols on the network—making it the fifth-largest L2 blockchain in terms of total value locked (TVL).

What’s in it for Coinbase? While it’s very much a centralized company, Coinbase has had big visions for building out DeFi since 2016. And importantly, Base could provide a revenue boost for Coinbase, which has seen market share slide over the past year.

Big picture: Competition to scale Ethereum is heating up with L2s now representing an all-time high TVL of more than $10.6 billion. But if Coinbase can leverage its size and influence in the crypto space, Base has the potential to become a big player in DeFi.

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Worldcoin Woes

So far, Worldcoin’s road to success is anything but smooth sailing—the project is facing tough regulatory headwinds just a few weeks after launch.

What happened: Kenyan police raided Worldcoin’s Nairobi warehouse, claiming the company failed to disclose its true intentions when registering in the country, local news organizations reported last Monday. This comes after Kenya became the first country to block all Worldcoin operations two weeks ago.

Zoom out: German, French, and U.K. regulators are also probing Worldcoin—data privacy and security appear to be the main points of concern.

In other news:

• The SEC is appealing the Ripple Labs ruling.

• Huobi is grappling with hefty outflows and insolvency rumors.

• The Bitcoin Greed & Fear index flipped bullish, according to Matrixport.

• Aptos teamed up with Microsoft to build out new blockchain AI tools.

• The Shiba Inu ecosystem is getting another upgrade, moving it away from its original memecoin status.

Crypto Job Board

• Cryptography and game theory your jam? Connext is hiring an Engineering Manager to lead its team of software engineers.

• Investment fund RockTree Capital is looking for an Executive Assistant to its CEO.

• Produce unique insights about the digital assets industry as a Research Intern at crypto news platform The Block.

And that’s what you need on your radar today in crypto. Are you getting your iris scanned by one of Worldcoin’s (in)famous orbs? Let me know in the replies. Catch you back here next Tuesday!