What Is PYUSDx and How Does It Work?

PayPal is widening access to its stablecoin infrastructure through a new platform called PYUSDx, designed to allow developers to create their own US dollar-pegged tokens backed by PayPal USD. The product was announced Friday in partnership with MoonPay and stablecoin platform M0, with a rollout planned for next month.

According to the joint announcement, PYUSDx is a tokenization and issuance framework offered by MoonPay Digital Assets. It is separate from PayPal USD (PYUSD) itself and is intended to help developers launch application-specific stablecoins — digital dollars designed for use inside a particular app, ecosystem or platform.

Launched in August 2023, PayPal USD is issued by Paxos Trust Company, a federally regulated national banking association. PYUSD currently ranks as the sixth-largest stablecoin by market capitalization, with roughly $4.2 billion in circulation, according to CoinGecko.

The companies said PYUSDx combines M0’s universal stablecoin platform with MoonPay’s infrastructure to reduce the technical and operational burden of issuing US dollar-backed tokens. Features include cross-chain compatibility, customizable economic structures, reserve transparency and the ability to issue branded stablecoins.

Why Target Developers at the Application Layer?

PayPal framed the launch as a move toward deeper integration of stablecoins inside digital platforms rather than simply offering a standalone token.

“The next phase of stablecoin adoption is happening at the application layer. Developers want to build differentiated experiences, but they shouldn’t have to rebuild trusted monetary infrastructure from scratch,” said May Zabaneh, PayPal’s head of crypto.

By allowing developers to issue tokens backed by PYUSD reserves, PayPal is offering a model in which core monetary infrastructure remains centralized and regulated, while branding and functionality can vary across applications. That structure may appeal to fintech firms, gaming platforms, AI infrastructure providers and digital marketplaces that want in-app stablecoins without building payment rails independently.

Investor Takeaway

PYUSDx moves PayPal beyond issuing a single stablecoin and toward offering infrastructure-as-a-service, potentially expanding stablecoin circulation without directly growing PayPal’s consumer wallet footprint.

How Does This Fit Into the Competitive Stablecoin Landscape?

The launch arrives as competition in the stablecoin market accelerates. Reports indicate that Meta is exploring stablecoin-based payments across Facebook, Instagram and WhatsApp. Traditional fintech firms and crypto-native issuers are also racing to embed dollar-backed tokens into consumer and enterprise workflows.

Unlike direct wallet integrations, PYUSDx focuses on enabling third-party issuance. Developers can create tokens backed by PYUSD reserves, but those tokens are distinct from PYUSD itself. According to the announcement, PYUSDx tokens cannot be used, sent or stored within PayPal or Venmo accounts.

That separation suggests PayPal is attempting to extend its regulated stablecoin base into external ecosystems while keeping its core consumer applications operationally distinct.

Who Is Building on PYUSDx First?

USD.ai, a decentralized finance protocol that issues stablecoins including USDai and yield-bearing sUSDai, is the first developer building on PYUSDx. The platform will use the framework to support an application-specific stablecoin tied to AI infrastructure.

The partnership illustrates how PayPal’s infrastructure could be used beyond retail payments. By anchoring tokens to PYUSD reserves while allowing specialized use cases, the model opens the door to sector-specific stablecoins in areas such as AI compute, gaming economies or digital content platforms.

The announcement also follows reports that YouTube enabled US-based creators to accept payouts in PYUSD in late 2025, reflecting broader use of stablecoins beyond crypto trading venues.

Investor Takeaway

If developer adoption gains traction, PYUSDx could increase demand for PYUSD reserves indirectly, strengthening PayPal’s role in dollar-backed digital settlement even where users never interact with PayPal wallets.

As stablecoins move from exchanges into embedded finance and application ecosystems, infrastructure providers — not just token issuers — are competing for influence. PYUSDx places PayPal in that race, offering regulated dollar backing while outsourcing token branding and user experience to developers.