Coinbase Launches No-Cost Conversion for PayPal's PYUSD as Stablecoin Rivalry Grows

Key Information:

Coinbase is launching free conversions between U.S. dollars and PayPal’s PYUSD stablecoin for both retail and institutional clients.
The exchange plans to broaden its support for stablecoin payments to PayPal’s major merchant partners.
Stablecoins are being recognized as a more cost-effective and rapid alternative to conventional payment systems, with expectations of reaching a market cap of $2 trillion by 2028.

Crypto exchange Coinbase confirmed that it will facilitate fee-free swaps between PayPal’s PYUSD stablecoin, which is pegged to the dollar, and U.S. dollars. This initiative aims to hasten the transition to on-chain payment systems.

This offer will be available to all clients, including institutional users, and is part of a collaboration designed to enhance PYUSD as a viable payment option. Coinbase’s platform will also enable PYUSD transactions for PayPal’s wide range of merchant affiliates, potentially facilitating the everyday use of stablecoins.

Growing Competition Among Stablecoins

Stablecoins, which are digital currencies tied to fiat money—especially the dollar—represent one of the most rapidly expanding sectors in cryptocurrency. They promise a faster and more efficient alternative to traditional payment infrastructures and are increasingly favored for cross-border transactions. Standard Chartered predicts that the stablecoin market could swell to $2 trillion by 2028 from $220 billion currently.

With regulatory frameworks for stablecoins moving forward in the United States, competition is intensifying among issuers. Traditional financial institutions and payment service providers are also exploring opportunities in this emerging market. Major exchanges like Binance and issuers like Circle are collaborating to adopt USDC as a trading and payment option, further solidifying this trend.

In parallel, market leader Tether, which controls the $140 billion USDT stablecoin, is contemplating the launch of a stablecoin developed specifically for U.S. consumers. Meanwhile, PayPal, which launched its stablecoin in 2023, has reported significant growth to $860 million in holdings and has recently introduced a 3.7% annual yield on PYUSD to encourage adoption.