On August 7th, the US payment giant LianGuaiyLianGuail announced the launch of a stablecoin tied to the US dollar, which has caused a stir in the bearish cryptocurrency market.
Industry insiders believe that this is a milestone event, as the issuance of a stablecoin tied to the US dollar may enable LianGuaiyLianGuail to expand its user base to hundreds of millions of users in the cryptocurrency industry.
Expanding the User Base to Hundreds of Millions of Cryptocurrency Users
On August 7th, LianGuaiyLianGuail announced the launch of the stablecoin PYUSD.
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On its official social media, LianGuaiyLianGuail stated, “We have launched a new stablecoin, LianGuaiyLianGuail USD (PYUSD). It is designed for payments and supported by highly liquid and secure assets. In the coming weeks, you will be able to buy, sell, hold, and transfer PYUSD.”
LianGuaiyLianGuail was established in 1998 and is a traditional online payment service provider based in the United States. It has a market share of over 77% in the North American payment market. According to its official website, it has 435 million active consumers and merchants worldwide.
In the announcement, LianGuaiyLianGuail’s President and CEO, Dan Schulman, expressed the hope to further solidify LianGuaiyLianGuail’s leading position in the digital payment industry by leveraging the technology of instant and low-cost transfers without the need for central intermediaries, with the vision of becoming a part of the entire payment infrastructure.
PYUSD is issued by LianGuaixos Trust Co. and is backed by US dollar deposits, short-term government bonds, and similar cash equivalents. It is pegged to the US dollar and will gradually be made available to LianGuaiyLianGuail customers in the United States. PYUSD is issued on the Ethereum network and can be transferred to compatible third-party wallets outside of the LianGuaiyLianGuail network.
The launch of PYUSD has caused a significant impact on the declining stock price of LianGuaiyLianGuail and the cryptocurrency market.
On August 7th, LianGuaiyLianGuail’s stock price reversed its downtrend and rose by 2.66%. In the previous week, its stock price had continued to decline by 18%. Bitcoin and Ethereum also experienced rebounds, with both seeing gains of over 1% at the time of writing.
Industry analysts believe that LianGuaiyLianGuail has opened a convenient channel for ordinary users. Previously, users could only purchase stablecoins for payments through companies like Tether and Binance. Now, they can achieve this through LianGuaiyLianGuail’s platform, which may bring tens of millions or even hundreds of millions of users into the cryptocurrency field. In addition, LianGuaiyLianGuail’s compliance will also greatly expand the cryptocurrency industry.
Walter Hessert, the strategic director of LianGuaixos, stated that the launch of PYUSD is a “watershed moment” for the cryptocurrency industry. The difference between LianGuaixos and other competitors is that LianGuaixos is a trust company regulated by the New York Department of Financial Services (NYDFS). If LianGuaixos were to go bankrupt, the regulatory agency NYDFS would intervene, ensuring the safety of users’ funds.
Fang Hongjin, Co-Chairman of the Hong Kong Blockchain Association, stated that this is a milestone event. Although LianGuaiyLianGuail has fewer users than WeChat and Alipay, it is a more internationally-oriented mobile payment platform. With a large base of trusted users, LianGuaiyLianGuail has bridged the gap between traditional financial users and cryptocurrency users.
However, Fang Hongjin is not very optimistic about the recent promotion and application of PYUSD. He said, “LianGuaiyLianGuail is mainly used for personal cross-border payments. Adding a stablecoin pegged to the US dollar to its application may violate regulatory requirements in some countries and regions, making it unable to be used in those countries and regions.”
Meng Dinglin, a partner and chief technology expert at Jihuaicurrency, said in an interview with Techub News that the incident has had a significant impact on the cryptocurrency industry compared to the outside world, giving the industry more confidence. However, due to the lack of clear policy support and limited application scenarios, ordinary users outside the cryptocurrency circle still need an adaptation period.
“The threshold for using cryptocurrencies is relatively high, and payment companies are important in the cryptocurrency ecosystem. This incident may have a good publicity and popularization effect on ordinary users,” Meng Dinglin said.
Holding $600 million in cryptocurrency for customers
It was expected that LianGuaiyLianGuail would launch a stablecoin pegged to the US dollar. As early as 2021, there were media reports that LianGuaiyLianGuail was conducting research and development on a stablecoin pegged to the US dollar.
However, the process did not go smoothly. Due to an investigation by the New York Department of Financial Services (NYDFS) into LianGuaiyLianGuail’s stablecoin partner LianGuaixos, LianGuaiyLianGuail announced in February of this year that it was suspending its stablecoin product plans.
Industry analysts believe that LianGuaiyLianGuail’s recent launch of a stablecoin may be related to the relaxation of regulations.
In recent months, there has been a slight relaxation of strong regulations on the cryptocurrency industry worldwide. For example, Hong Kong, China has announced embracing Web3.0 and vigorously promoting the development of the Web3.0 ecosystem. The US SEC has officially accepted BlackRock’s application for a spot Bitcoin ETF, and a US court ruled that XRP is not a security.
As a giant in the traditional payment field, LianGuaiyLianGuail has been paying attention to the cryptocurrency industry early on and has been continuously laying out around online payments.
According to media reports, as early as 2016, LianGuaiyLianGuail established a long-term partnership with Coinbase. In 2018, Coinbase allowed US customers to make instant withdrawals through LianGuaiyLianGuail. Afterwards, Coinbase users in Europe, Canada, and other places could withdraw funds from their LianGuaiyLianGuail accounts.
In June 2019, Facebook released the Libra project whitepaper, in which LianGuaiyLianGuail was also involved, but announced its withdrawal in October of the same year.
According to the whitepaper, Libra is also positioned as a stablecoin pegged to a basket of sovereign currencies.
In October 2020, LianGuaiyLianGuail announced that it had obtained a restricted cryptocurrency license issued by the New York Department of Financial Services and would cooperate with LianGuaixos to enter the cryptocurrency market, allowing customers to buy, hold, and sell cryptocurrencies through its online wallet at LianGuaiyLianGuail. Subsequently, LianGuaiyLianGuail launched services for cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
In addition, LianGuaiyLianGuail has expanded its crypto landscape through acquisitions or investments.
In 2019, LianGuaiyLianGuail invested in TRM Labs, a company focused on preventing cryptocurrency fraud and financial crimes, and Cambridge Blockchain, a blockchain identity management and compliance software company.
In 2021, LianGuaiyLianGuail acquired crypto security company Curv for nearly $200 million.
However, LianGuaiyLianGuail’s involvement in the crypto industry has also been questioned. Some industry insiders say that the Bitcoin purchased on LianGuaiyLianGuail is not real Bitcoin and cannot be transferred to other wallets. It is simply a Bitcoin price exposure regulated by custodians, and users cannot verify LianGuaiyLianGuail’s actual reserves.
According to reports submitted by LianGuaiyLianGuail to the U.S. Securities and Exchange Commission (SEC), as of the end of 2022, LianGuaiyLianGuail holds a value of $604 million in Bitcoin, Ethereum, Litecoin, and Bitcoin Cash for its clients.
Fang Hongjin said that LianGuaiyLianGuail is a highly real-name payment system. Due to the habits of crypto users, the addition of USD stablecoins by LianGuaiyLianGuail is not particularly attractive to crypto users, but more to attract people outside the crypto community. Although the issuance of USD stablecoins by LianGuaiyLianGuail has a significant impact on industry public opinion, it will not pose significant competition to crypto companies such as USDC and USDT in the short term.
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