Token Description & Project Background

Launched by PayPal and issued by Paxos Trust Company, PayPal USD (PYUSD) is a U.S. dollar-denominated stablecoin fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents. PYUSD aims to transform digital payments and Web3 environments by offering a stable and secure digital representation of the U.S. Dollar, redeemable on a 1:1 basis.

PYUSD is an ERC-20 token on the Ethereum blockchain. Eligible U.S. PayPal customers can engage in several activities with PYUSD, including:

• Transferring PYUSD between PayPal and compatible external wallets.
• Sending P2P transactions using PYUSD.
• Funding purchases by selecting PYUSD at checkout.
• Converting any of PayPal's supported cryptocurrencies to and from PYUSD.

USDC, a stablecoin with similar characteristics to PYUSD, experienced a temporary deviation from its peg to the US dollar during the banking crisis in the United States and the failure of Silicon Valley Bank (SVB). The price of USDC briefly dropped to nearly US$0.88 before recovering. The reason behind this occurrence was that Circle had US$3.3 billion in reserves stored at SVB. 

Risks of PYUSD

As with all investments in crypto assets, there are some general risks to investing in USDC. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in PYUSD is subject to the following specific risks:

• Although PYUSD provides monthly and historical attestations, there is still a possibility of the PYUSD token temporarily deviating from its peg in times of significant volatility or disruption to the custody provider’s financial stability. 

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with PYUSD. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

Paypal and Paxos are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of PYUSD have no recourse to Paypal, Paxos or Uphold if PYUSD declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing PYUSD on the Uphold Platform, Uphold performed due diligence on PYUSD and determined that PYUSD is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following:

• The creation, governance, usage, and design of PYUSD, including ensuring the source code is open-source, audited and peer reviewed, security and monthly attestations.
• The supply, demand, maturity, utility, and liquidity of PYUSD.
• Any marketing materials put forward by the PYUSD social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with PYUSD, including any code defects, security breaches and other threats concerning PYUSD and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with PYUSD, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of PYUSD. 

General

Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Uphold users should read the Risks Specific To Holding Digital Assets statement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.  

Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following link. Please also review the Uphold Canada – Crypto Risk Statement for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website (including the Uphold Canada - Platform Risk Statement and Risks Specific To Holding Digital Assets statement). 

Last updated on August 6, 2023.