San Jose, CA – PayPal Ventures, the venture capital arm of digital payments behemoth PayPal, has officially forayed into using its own stablecoin, PayPal USD (PYUSD), for investment purposes. The recipient of this groundbreaking move is Mesh, a startup specializing in cryptocurrency security, signaling PayPal’s deepening foray into the digital currency landscape.
Mesh: A Fintech Innovator
Founded in 2020, Mesh has positioned itself as a key player in the fintech sector, offering a suite of services that includes enabling crypto payments, account aggregation, and trading options across more than 300 platforms. By securing the backing of PayPal Ventures, Mesh is set to further its mission of integrating crypto solutions for enterprise clients on a global scale.
Utilizing PYUSD for Funding
In a strategic move, PayPal has leveraged PYUSD, an Ethereum-based stablecoin, marking the first instance of such an asset being used as a venture funding tool. The specifics of the financial engagement remain private, but the transaction was conducted “almost entirely” in PYUSD, with Mesh utilizing its proprietary Application Programming Interfaces (APIs) to facilitate the on-chain transfer.
A Stablecoin on the Rise
Despite being a relative newcomer to the stablecoin arena, having launched in August 2023, PYUSD has quickly risen through the ranks, now sitting in the eighth position amongst top stablecoins by market capitalization. Backed by U.S. dollar deposits and other cash equivalents, PYUSD is designed for stability and user convenience, allowing for the seamless conversion of digital currencies into fiat. This latest venture deal underscores PayPal’s commitment to expanding its web3 integration initiatives.
Regulatory Scrutiny
PayPal’s stablecoin efforts have not gone unnoticed by regulatory bodies. In November 2023, the U.S. Securities and Exchange Commission (SEC) issued an investigative subpoena concerning PYUSD. The details of the inquiry are not public, but the scrutiny reflects the heightened attention that stablecoins and their issuers are attracting from regulators.
PayPal’s Cryptoasset Recognition
PayPal’s involvement in the cryptocurrency sector extends beyond its stablecoin. The company recently received recognition as a cryptoasset business in the United Kingdom, further cementing its status as a key player in the industry.
This inaugural investment in Mesh by PayPal Ventures using PYUSD may well be the beginning of a new trend for venture capital financing in the crypto era—a trend that’s worth watching.
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