Global payments giant PayPal has introduced a US dollar-pegged stablecoin, becoming the first major US financial institution to do so, despite amountain of regulatory headwinds facing the crypto industry.

The coin is redeemable 1:1 for US dollars and issued by Paxos Trust Co., the blockchain infrastructure company that also built a stablecoin for the world’s biggest crypto exchange, Binance.

Users can transfer funds within the platform and to supported external wallets using the stablecoin. The dollar-denominated token can also be used to make purchases and exchange for other assets, such as Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, on the PayPal network, which has roughly $1 billion in customers’ crypto funds.

PayPal is also planning to add the stablecoin to its widely used payments app Venmo.

PayPal USD is “designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents,” the company said.

“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” Dan Schulman, PayPal’s president.

For transparency purposes, Paxos will be publishing public monthly reserve reports for PayPal USD defining the instruments comprising the stablecoin’s reserves starting September 2023.

Stablecoins have existed for about a decade but have mostly been used to transfer assets between exchanges. Meanwhile, its use cases in the consumer payments business have grown slowly. PayPal, on the other hand, believes that the regulatory picture is becoming clearer, underlining the growing desire for alternative stablecoins as a result of the extremely concentrated industry.