This Jan. 12 episode of "The Crypto Show" on Backstage Pass features an interesting discussion between Fool.com contributors Chris MacDonald and Jon Quast as to what incentive PayPal (PYPL +0.60%) might have to create its own stablecoin, rather than rely on an existing option such as Tether (USDT 0.01%).
Jon Quast: I don't mean to put you on the spot here, Chris, but as I'm thinking this through, is there advantage for PayPal to create its own stablecoin versus simply supporting a stablecoin that's already in existence? What does PayPal get out of this?
Chris MacDonald: Well, that is interesting. I know we're going to talk in the next piece about a company that's using another stablecoin. I think there's pros and cons to both.
PayPal probably would get more transparency into what's actually backing the stablecoin and they would have control over that. There's probably that control aspect that they would want. Like I said, with Tether, for example, there's been some questions about what assets exactly are backing the token. In terms of transparency, that can be a little bit opaque, let's say, in the crypto world.
There's probably maybe a strategic reason for PayPal to step in and do it themselves or try to do it themselves. Having a regulatory approval or a stamp of approval for a stablecoin would be great for a company like PayPal and theoretically could be a competitive advantage, I guess, over other large tech companies looking to do the same thing.
Maybe they're looking for a first-mover advantage.
But it is an interesting development and that's an interesting question to why not just use Tether or USDC or some of the others.
