PayPal Receives New York Crypto Trust License

The New York State Department of Financial Services (NYDFS) recently granted a limited purpose trust license to PayPal Digital, which is typically held by digital asset custodians and stablecoin issuers. In August of last year, PayPal launched its first stablecoin, PYUSD, which was technically issued by Paxos Trust Company, which also holds an NYDFS trust license and has been a partner of PayPal since the launch of its cryptocurrency services.

This trust license may be aimed at taking over the custody of PayPal customers' crypto assets and internalizing stablecoin issuance. Currently, the market value of PYUSD is close to $400 million, a significant increase from $190 million in early April. The top five wallets hold 71% of stablecoin balances, with major holders including Paxos, Crypto.com, Curve (DeFi), Defiance Capital, and Frax (DeFi). Among them, Crypto.com and Bullish exchange hold $103 million and $23 million, respectively.

In November of last year, the US Securities and Exchange Commission (SEC) issued a subpoena requesting documents related to the issuance of PYUSD stablecoin. PayPal did not respond to the specific use of this trust license prior to its release.