A New Layer for Stablecoin Innovation

PayPal has teamed up with MoonPay and M0 to introduce PYUSDx, a new platform designed to help developers create their own US dollar-pegged stablecoins backed by PayPal USD. The companies announced that the product is expected to roll out next month.

The initiative signals a shift in how stablecoins are being used. Instead of building general-purpose tokens for broad trading and payments, PYUSDx focuses on enabling application-specific digital dollars tailored for individual apps, platforms or ecosystems. Developers will be able to issue branded stablecoins anchored to PayPal USD without having to build complex financial infrastructure from the ground up.

May Zabaneh, head of crypto at PayPal, said the next stage of stablecoin growth is unfolding at the application layer, where developers are seeking more control over user experiences while relying on trusted monetary foundations.

How PYUSDx Works

PYUSDx is described as a tokenization and issuance framework offered by MoonPay Digital Assets. It is separate from PayPal USD itself and is not intended to function as a retail-facing token inside PayPal or Venmo accounts.

The platform combines M0’s universal stablecoin framework with MoonPay’s infrastructure to simplify the launch of dollar-backed tokens. By reducing the technical and operational demands typically associated with stablecoin issuance, PYUSDx aims to lower the barrier to entry for developers.

Among its features are cross-chain compatibility, faster deployment timelines, customizable token economics, reserve transparency and options for branded tokens. This allows an app developer, for example, to create a stablecoin tailored to its own ecosystem while relying on the underlying stability of PayPal USD.

Importantly, PYUSDx tokens are distinct from PayPal USD and cannot be stored, sent or used within PayPal or Venmo wallets.

Backed by PayPal USD

PayPal USD, also known as PYUSD, was launched in August 2023 and is issued by Paxos Trust Company, a federally regulated national banking association in the United States. It is fully backed by US dollar reserves and short-term US Treasurys.

While PYUSD serves as a regulated digital dollar available through PayPal’s ecosystem, PYUSDx extends its reach into third-party applications. In effect, it allows developers to create their own tokens that are anchored in PYUSD’s reserves without directly issuing a new independent stablecoin from scratch.

The companies emphasized that this structure provides a regulated and trusted base layer while giving developers flexibility at the application level.

Competition Heats Up in Stablecoins

The launch of PYUSDx comes at a time when competition in the stablecoin market is intensifying. Major technology firms and financial players are exploring dollar-backed digital tokens for payments, remittances and in-app transactions.

Reports suggest that Meta is considering stablecoin-based payment integrations across platforms such as Facebook, Instagram and WhatsApp. These moves point to a broader effort by large platforms to weave digital dollars directly into user experiences.

By enabling developers to issue customized tokens backed by a regulated stablecoin, PayPal and its partners appear to be positioning themselves as infrastructure providers for this next wave of digital payments.

First Use Case: AI Infrastructure

The first developer building on PYUSDx is USD.ai, a decentralized finance protocol that issues stablecoins such as USDai and yield-bearing sUSDai. The company is using PYUSDx to support an application-specific stablecoin designed for AI infrastructure use cases.

This early adoption suggests that PYUSDx may find traction in emerging sectors where programmable money and embedded payments play a central role, including artificial intelligence, gaming and decentralized finance.

The broader rollout also aligns with PayPal’s efforts to expand real-world utility for its stablecoin. In late 2025, reports indicated that YouTube enabled US-based creators to accept payouts in PYUSD, underscoring how digital dollars are moving beyond trading platforms and into mainstream digital services.

With PYUSDx, PayPal, MoonPay and M0 are betting that the future of stablecoins lies not only in global payments, but in powering the internal economies of apps and online communities. By offering developers a ready-made monetary backbone, the trio hopes to accelerate that transition while maintaining regulatory credibility and operational simplicity.