PayPal USD (PYUSD 0.02%) and Ripple USD (RLUSD +0.08%) aren't the largest stablecoins on the market. As of this writing on Nov. 13, their respective market caps of $3.4 billion and $1.0 billion look like rounding errors next to USDC's (USDC +0.00%) $75.5 billion and Tether's (USDT 0.03%) $184.0 billion.
But they are refreshingly different from the usual big-name stablecoins. Each one comes with a few unique features -- and limitations. So, if you're looking for a lesser-known stablecoin to buy, which one is the better choice right now?
CRYPTO: PYUSD
Key Data Points
Where can you actually buy these stablecoins?
First of all, one of these coins may be easier to buy than the other. It depends on which crypto-trading service you're using.
The big dogs like Tether and USDC are available on pretty much any popular platform, alongside popular non-stablecoins such as Bitcoin and Dogecoin. PayPal USD and Ripple USD are not universally available everywhere.
For example, my Coinbase (COIN +0.30%) account provides information only on Ripple USD, with no buy buttons in sight. "Ripple USD is not tradable on Coinbase," the service says. Coinbase does support trading PayPal USD but won't pay any interest-like rewards on those holdings.
Searching for PYUSD or RLUSD on Robinhood (HOOD +0.66%) won't even give me a search result with basic information. Kraken gives me access to both but, again, without those sweet reward payouts. Same story at Uphold: I can buy them but not earn interest. Yeah, call me a nerd -- I have a couple of different crypto-trading accounts.
CRYPTO: RLUSD
Key Data Points
PayPal's home turf advantage
If you want a full-featured PayPal USD holding, you should, of course, buy it in your PayPal (PYPL 3.86%) account. It could take a minute to find "crypto" in the PayPal dashboard's menu system, but when you finally click on it, your screen fills up with news about PYUSD's trading options. And the coin will earn 4% a year in this account. The service offers only seven cryptocurrencies, but PayPal USD is absolutely an option.
Ripple's stablecoin is available in more than two dozen crypto exchanges, but it's really intended for smoother trading of Ripple's XRP (XRP +1.47%) token. The group is working on a yield-generating staking system, but it's not ready for prime time yet. Wherever you go, XRP's stablecoin cousin won't earn you any interest payouts.
Investment versus infrastructure
RLUSD is backed by cash reserves and can be exchanged for an equal amount of U.S. dollars anytime. Its tokens move across the Ethereum and XRP blockchain networks. It's the perfect tool for sending cash across international borders, and not much else. This coin provides liquidity and rapid execution of RippleNet transactions in tandem with the XRP coin.
There's really no reason to buy and hold it as an investment, at least not until those impending yield features are completed.
PYUSD is slightly different. Its cash backing and dollar-redemption features are the same, but that's about it. This was originally an ERC-20 token on the Ethereum network and has added several more trading networks over time. You'll earn 4% interest while holding PYUSD coins in your PayPal wallet. Transfer fees are zero if you send PYUSD coins on PayPal's own Venmo or the PayPal cash-transfer service. And if you insist on venturing outside PayPal's borders, there are no fees for PYUSD transfers on the Solana blockchain.
Image source: Getty Images.
I'd honestly prefer to make money on my stablecoin holdings
So, yeah, there are some solid reasons to hold PYUSD coins instead of dollars in your PayPal account. Four percent is a pretty robust annual yield, and the fee-free transfers could come in handy.
Therefore, I see a clear winner here, even if both coins are pegged to the $1.00 price point forevermore. It can make financial sense to own PayPal USD for its own sake, while the RLUSD coin is best used behind the scenes of RippleNet and XRP transactions. If you don't even notice using it, RLUSD is doing its job.
