PayPal CEO Pushes for Incentives to Boost Stablecoin Adoption Amid Regulatory Shifts

PayPal's CEO, Alex Chriss, has highlighted the need for incentives to drive stablecoin adoption among US consumers. Speaking on June 26, Chriss noted that the current lack of meaningful incentives is a significant barrier to widespread stablecoin use. This perspective comes as PayPal advances new initiatives focused on rewards and cross-border transfers, aiming to make stablecoins more attractive to consumers.

Chriss's comments follow the Senate's passage of the GENIUS Act, a bill that could establish the first federal framework for regulating dollar-pegged stablecoins. The House is preparing to consider this legislation, which, if paired with the CLARITY Act, could provide a comprehensive regulatory structure for stablecoins. This regulatory momentum coincides with the expansion of stablecoins beyond crypto trading into broader payment systems.

Despite the growth of stablecoins, retail transactions in the US remain heavily reliant on credit card networks, which charge interchange and assessment fees averaging 2 to 3 percent. Merchants are drawn to the lower costs of blockchain-based payments, but consumers see little value in switching without additional benefits such as rewards or yield features. PayPal introduced its dollar stablecoin, PYUSD, in August 2023 through a collaboration with Paxos, releasing it as an ERC-20 token on Ethereum.

PYUSD has since expanded to platforms like Venmo, but Chriss acknowledged that consumer adoption hinges on tangible benefits. He emphasized the importance of rewards programs in driving adoption, stating, "From a consumer standpoint, there isn’t a real incentive to drive adoption … that is why we’re starting to create things like rewards." In April, PayPal announced a 3.7 percent annual yield on PYUSD balances to spur interest, positioning PYUSD against stablecoin incumbents like Circle’s USDC and Tether’s USDT, which account for over 90 percent of the stablecoin supply.

Cross-border payments represent another avenue where PayPal sees potential for PYUSD. Remittance fees still average 6.3 to 6.6 percent globally, presenting a cost gap that blockchain networks could close. Chriss described the first applications of PYUSD as likely to emerge in international transfers, offering faster and more affordable payment options. In mid-June, PayPal announced plans to bring PYUSD to the Stellar blockchain to facilitate quicker, lower-cost remittances under its PayFi strategy.

The progress of the GENIUS Act in Congress has raised questions about how a federal regulatory framework might influence stablecoin adoption. The shifting regulatory landscape also factors into broader market conditions, with traditional card networks feeling competitive pressure. PayPal’s focus on rewards and yield for PYUSD aims to bridge the divide between crypto’s low-fee rails and consumers’ expectations for tangible perks, positioning the stablecoin not merely as a trading instrument but as a contender in the payments space.

Whether these incentives will overcome entrenched habits remains uncertain, but PayPal is pressing forward, linking regulatory developments, yield strategies, and blockchain integrations in a bid to secure a foothold in the evolving stablecoin market. It’s also important to note that most stablecoin adoption lies outside the US, where developing nations use stablecoins to access the dollar and conduct safe, cheap, and fast self-sovereign cross-border payments. The benefits of stablecoins are incentive enough for those consumers, while US-based PayPal customers don’t face the same hurdles.