PYUSDx allows companies to forge custom PayPal to support stablecoins

PayPal, M0 and MoonPay jointly launched PYUSDx: a customized stablecoin issuance platform

On September 9, 2026, PayPal and blockchain infrastructure company M0 and cryptocurrency payment company MoonPay officially launched PYUSDx. This is a White-label platform designed to allow companies to issue custom stablecoins backed by PYUSD-without having to build reserve management, smart contracts or compliance frameworks from scratch. The product is not a new consumer-grade token, but a white label toolkit that allows fintech teams and crypto-native developers to create application-layer-specific stablecoins, each token fully supported by existing PayPal USD (PYUSD) reserves on a 1:1 basis. In the early days of launch, the total transaction volume and asset management scale of the three active projects within the ecosystem exceeded US$100 million.

Moving from selling tokens to providing reserve services

In the past two years, PayPal has been promoting PYUSD to retail users, but its liquidity is far less than that of market-dominated mature tokens. The emergence of PYUSDx changed this competitive landscape. Instead of competing directly on a "token for token" basis, PayPal positions PYUSD as a reserve asset behind other companies 'stablecoins, thereby transforming a consumer product into the back-end infrastructure of corporate digital currencies.

May Zabaneh, senior vice president and general manager of cryptocurrency at PayPal, described the shift as occurring at the "application level." She pointed out that developers want to build differentiated user experiences without having to rebuild a trusted monetary infrastructure, and predicted that every fintech developer will eventually use a solution similar to PYUSDx. Luca Prosperi, co-founder and CEO of M0, elaborated on the same design philosophy from a developer's perspective, saying the system aims to "leave the product layer to developers."

For corporations that want to own chained dollars, they can define their own token rules, borrowing both PayPal's reserves and MoonPay's issuance channel. Based on parameters released by MoonPay, this shortens the path from concept to actual deployment from months to days.

Four-tier structure, four-party ownership, single dollar reserve

PYUSDx stacks four different levels of responsibility, each of which is responsible for by a different entity:

• 1. Customization layer (developer/issuer): Controls token names, codes, brand identities, revenue routing, freeze controls, and compliance rules.
• 2. Technology Engine (M0): provides a common digital token standard for tokenization technology and running branded coins.
• 3. Issuance and Operations (MoonPay Digital Assets Ltd): is responsible for token issuance, holds PYUSD reserves and provides real-time collateral transparency.
• 4. Monetary base (PayPal & Paxos Trust):PYUSD reserves backed by treasury bonds, US dollar deposits and cash equivalents on a 1:1 basis.

Issuers reserve the right to redeem their custom tokens into native PYUSD at any time on a 1:1 ratio in order to return liquidity to the traditional banking system. This redemption right is an institutional-level exit mechanism that ensures that no matter what rules are superimposed on the top, all brand tokens are anchored to the same dollar reserve.

Custom tokens are strictly prohibited for use in PayPal and Venmo apps

There is a strict boundary at the core of the design: Tokens minted through PYUSDx cannot be used or viewed within PayPal or Venmo apps. They exist only in external on-chain applications, Web3 ecosystems, and cross-EVM networks. The separation is not a restriction that PayPal plans to remove later, but a key design that allows the company to provide reserves to third-party tokens without assuming responsibility for circulating coins on the public blockchain.

Multi-layered physical structures may circumvent GENIUS Act regulation

Tokens need to pass through a series of physical chains before reaching the blockchain: PayPal provides reserves, Paxos issues PYUSD, MoonPay Digital Assets Limited issues custom tokens, and ultimately project deployment tokens. Early reports suggest that this arrangement places the PYUSDx layer outside the GENIUS Act, the regulatory framework for issuers of stablecoins in the United States. Legal documents clearly state that custom tokens are issued only by MoonPay Digital Assets Limited, are not products of PayPal, are not associated with Paxos Trust Company, and do not inherit the regulatory protections attached to retail PYUSD.

For PayPal, this isolation protects it from liability for third-party use; for companies built on the platform, it leaves a pending compliance issue, especially when U.S. regulators decide to bring reserve-backed structures into regulatory jurisdiction.

PYUSD ranks eighth, USDT accounts for 60% of the market.

PYUSD is still a minor player at the retail level. Data shows the gap in its starting position:

• Initial transaction volume/asset management scale: More than US$100 million (Covering three active projects)
• PYUSD Market Value: Approximately US$2.814 billion (the eighth largest stable coin)
• USDT Market Share: 60.07%(accounting for approximately US$305.25 billion in total market size)
• Monthly transfers: US$7.2 trillion (Overcoming the U.S. ACH network for the first time)
• Number of new coins supplied exceeding US$10 million: Year-on-year growth of 89% in 2025

Tether's USDT accounts for 60.07% of the approximately US$305.25 billion market share, while PYUSD's market value of nearly US$2.814 billion puts it eighth. Competition in the consumer market is extremely uneven, and PYUSDx has limited direct changes to this. PayPal focuses on the macro background: at the beginning of 2026, the monthly transfer of global stablecoins exceeded US$7.2 trillion, surpassing the U.S. ACH network for the first time; in 2025, the number of new stablecoins with a supply of more than US$10 million increased by 89% year-on-year. Each new token requires a reserve base, which is exactly the market supply PayPal is trying to capture.

Three projects have been launched, and two more have joined the

initial ecosystem before the end of the year. Three of them are already processing transaction volume:

• Saturn: runs online, trading between DeFi and investment products.
• Concrete: is running online, focusing on credit and automated chain vaults.
• Cap: runs immediately online to build financial products supported by Bitcoin.
• USD.AI and Fairblock: has been confirmed and is on board, and its custom tokens are scheduled to be launched before the end of 2026.

Cryptocurrency analyst Scott Melker described the structure as a bridge between institutional asset tracking and developer freedom, calling it a template for traditional payment tracks to extend onto the chain without relinquishing control of core reserves.

Performance before the end of the year will be the real test

The next real test will be the batch added later this year. USD.AI and Fairblock will demonstrate whether members of the non-IPO team can transition from onboarding to online custom tokens as planned, and whether regulatory isolation remains in effect as more issuers put pressure.

PayPal's recent pace suggests it is willing to invest money to cultivate demand: In October 2025, PYUSD supply surged by $1.3 billion through DeFi incentives and Layer-2 integration on Arbitrum and Solana; in March 2026, a rollover expanded consumer PYUSD functionality to 70 markets, many of which are areas where remittance rates are still between 5% and 10%. If PYUSDx can convert some of the new token offerings into supply backed by PYUSDx, then whether PayPal closes the gap with USDT on the retail side, its reserve base will expand.