JP Morgan: PYUSD benefits Ethereum, but stablecoin regulatory framework remains up in the air

PayPal’s stablecoin PYUSD, launched this week, could benefit ethereum by increasing its trading volume, JPMorgan said. But it also reminded that the regulatory framework for stablecoin issuers is still pending in the United States.

PYUSD may be able to fill the gap of BUSD

According to The Block, JPMorgan analyst Nikolaos Panigirtzoglou believes that the issuance of PYUSD may boost activity on the Ethereum chain and enhance Ethereum’s network effect as a stablecoin/DeFi platform.

In other words, PayPal’s move is expected to encourage more companies to choose the Ethereum blockchain (or its Layer 2) to issue stablecoins or decentralized projects in the future.

Panigirtzoglou said that Ethereum may further benefit from PYUSD. Since BUSD was ordered to stop issuance by the New York Department of Financial Services this year, PYUSD may be able to fill this gap. In this way, there is an opportunity to transfer transaction volume from Binance Smart Chain to Ethereum. Blockchain (or its Layer 2).

Opponents question Ethereum’s high gas fees

However, some cryptocurrency experts have criticized PayPal for choosing Ethereum as its stablecoin issuance chain because of its high gas fees.

Jayendra Jog, co-founder of Sei Network (a Layer 1 that aims to develop lower transaction fees) said:

Using PYUSD would be ridiculous with its high gas fee, which would reduce its usage. To help improve the user experience, PayPal would either need to subsidize transaction costs or support PYUSD on other networks with cheaper gas fees.

However, JPMorgan analyst Panigirtzoglou and his colleague Mayur Yeole both believe that PayPal’s entry into the stablecoin business will enhance the synergies between traditional finance and decentralized financial payment networks.

But they also reminded:

The regulatory framework for stablecoin issuers remains up in the air in the United States, and the looser compliance and regulatory framework enjoyed by fintech companies may change in the future.

Yesterday Chain News also compiled other different opinions, such as doubts about its code, bullishness from Ethereum supporters, and Patrick McHenry, chairman of the House Financial Services Committee, who believes that stablecoins are expected to become a new pillar of the payment system.

In addition, stablecoin issuers Circle and Tether also expressed their opinions immediately.

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