The New York State Department of Financial Services (NYDFS) has just issued a limited purpose trust charter to PayPal Digital. This is the same type of trust charter commonly held by digital asset custodians and some stablecoin issuers.
Last August, PayPal launched the PYUSD stablecoin, the first stablecoin from a major tech company. Technically, the stablecoin issuer is Paxos Trust Company, which also holds a NYDFS limited trust charter. Paxos has been a partner of PayPal since the launch of its cryptocurrency. Therefore, the purpose of the trust charter may be to take over the custody of PayPal customers’ crypto assets and move the issuance of stablecoins in-house.
We contacted PayPal to verify the use but did not receive a response before publication.
The PYUSD stablecoin is still in its early stages, and the company recently enabled its cross-border payments feature in its Xoom app.
Currently, PYUSD has a market cap of just under $4 million, up from $4 million in early April. However, wallets associated with issuer Paxos account for more than $1.9 million of the balance, which may be held on behalf of PayPal. The top five wallets account for 1.25% of the stablecoin balance. 71 wallets hold $17 million or more, accounting for 100% of the holdings.
The top five holders are Paxos, Crypto.com, Curve (DeFi), Defiance Capital, and Frax (DeFi). Currently, two cryptocurrency exchanges are among the largest holders - Crypto.com holds $1.03 million and Bullish holds $2300 million.
Meanwhile, last November, the SEC’s Enforcement Division issued a subpoena seeking documents related to the issuance of the PYUSD stablecoin.