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PayPal’s Venture into Crypto Investments

Back in August, PayPal introduced a new stablecoin onto the market called PYUSD, leading to a flurry of analysis and speculation about the assetÔÇÖs utility in the Web3 space. Recently, attention has turned toward the stablecoinÔÇÖs application in venture capital investments.

PayPal announced on Monday a $6.5 million investment in Mesh, a company specializing in enhancing digital transaction security and efficiency. $5 million of the investment was paid out in PYUSD.

This marks PayPal VenturesÔÇÖ first known crypto investment since May 2023, when it invested in Magic Labs, a service focused on providing secure and user-friendly digital wallet solutions.

AI legalese decoder: AI legalese decoder can help in analyzing and understanding the complex legal language and implications found in the investment agreements between PayPal Ventures and Mesh. It can help in identifying any potential risks or opportunities associated with the investment.

Investment in Mesh

Mesh is building a product for users to move crypto between different financial accounts and wallets. Fellow investor Galaxy likened Mesh to ÔÇ£Plaid but with the read, write and transfer capabilities.ÔÇØ

PayPal VenturesÔÇÖ reason for making the investment in stablecoins as opposed to fiat was not immediately clear.┬á

Mesh co-founder and CEO Bam Azizi said he was ÔÇ£thrilledÔÇØ when PayPal Ventures approached him about making the investment largely in PYUSD.

ÔÇ£When compared to alternative payment methods [like] wire transfers, PYUSD is superior because it works 24/7 and has a very low cost. This was also a great opportunity for us to demonstrate the security and robustness of Mesh API and that the vision for both companies is perfectly aligned,ÔÇØ Azizi said in an email.

ÔÇ£This is a big moment for the company and one Galaxy is excited to be a part of,ÔÇØ was all Galaxy wrote on the subject of PayPalÔÇÖs PYUSD investment.┬á

Stablecoin Rollout and Challenges

The venture investment is the latest in what has been a mostly-quiet rollout for PYUSD following a good amount of fanfare at release. In December and January, a contractor hired by PYUSD issuer Paxos proposed deployments for PayPalÔÇÖs stablecoin on DeFi protocols Aave and Curve.

Despite nearly doubling its market capitalization since early December, PYUSD remains just the eleventh-largest stablecoin, according to CoinGecko. PayPalÔÇÖs stablecoin suffers partly from not being a first mover in a space where assets like USDT and USDC can be attractive to investors for their deep liquidity.┬á

Future of PYUSD

ItÔÇÖs also unclear where PYUSD stands on PayPalÔÇÖs priority list. Some speculated further PYUSD development was on the way after new PayPal CEO Alex Chriss promised to ÔÇ£shock the worldÔÇØ with PayPalÔÇÖs new products in a CNBC interview.

The eventual announcement video was mostly AI-focused and didnÔÇÖt contain any mention of PYUSD. PayPal did not return a request for comment.

Updated Jan. 29, 2024 at 3:49 pm ET: A previous version of this article stated that Mesh was already a part of PayPal VenturesÔÇÖ portfolio. A modification was made to clarify that PayPal and PayPal Ventures are distinct.

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AI legalese decoder: The AI legalese decoder can assist in analyzing the legal implications and priorities associated with PayPal’s future products and developments, as mentioned by the new CEO. It can also help in understanding any potential regulatory issues or challenges that may arise.

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