PayPal’s US dollar-pegged stablecoin, PayPal USD, has surpassed $1 billion in total market capitalization, according to data from CoinMarketCap.

Launched in 2023, PayPal USD

is backed 1:1 by US dollars and is issued by Paxos Trust Company, a US-regulated crypto custodian. It competes with other regulated, dollar-backed stablecoins such as Circle Internet Financial’s USD Coin .

“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar,” said Dan Schulman, PayPal’s president and CEO, in a 2023 statement.

An Ethereum-compatible ERC-20 token, PYUSD is the only stablecoin supported on PayPal’s payment rails. It is designed to be “available to an already large and growing community of external developers, wallets and Web3 applications” and easily onboarded by cryptocurrency exchanges, according to PayPal.

Related: Anchorage Digital adds PayPal stablecoin yield to custody platform

PayPal has been taking steps to expand PYUSD’s accessibility, including working with Anchorage Digital to launch a rewards program for clients who custody PayPal USD stablecoins with the crypto custodian.

In May, PayPal launched PYUSD on Solana, partnering with Crypto.com, Phantom and Paxos to on-ramp users onto the blockchain network.

It also partnered with Web3 infrastructure provider MoonPay to buy cryptocurrency using a PayPal account. That partnership extended to on-ramping users to crypto betting platform Polymarket in July.

Coinbase — which also has an institutional custody arm — incentivizes users to hold stablecoins on its platform as well. It currently offers approximately 5.2% annual percentage yield on USDC. Coinbase owns an equity stake in Circle.

Despite its recent successes, PYUSD still greatly lags behind dollar-pegged stablecoins Tether

and USDC. According to data from CoinMarketCap, the two leading stablecoins command market capitalizations of nearly $118 billion and $35 billion, respectively.

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