PayPal is shaking up the cryptocurrency space with two big changes, including a new rewards system and a new partnership with Coinbase for PYUSD stablecoin, PayPal’s cryptocurrency that launched in 2023. 

The world of cryptocurrency is constantly evolving, but these changes could be important if you’re holding PYSUD in your PayPal or Venmo wallet. 

Here’s what the two announcements Thursday mean for your crypto earnings and what else you can expect from the online payment system. 

A new rewards system

Starting this summer, PayPal will launch a new rewards system for anyone holding PYUSD stablecoin.
You can earn rewards at 3.7% annually on stablecoin you keep in your PayPal or Venmo wallets, and you can continue to accrue rewards daily and be paid out monthly. The rewards will be directly added to your cryptocurrencies hub. You’ll receive the annual boosted rewards in the form of PYUSD on PayPal, where you can use the rewards immediately. 

“Consumers and businesses use PYUSD today for commerce, crypto, peer-to-peer transfers and B2B payments,” Alex Chriss, PayPal’s president and CEO, said in a statement. “We’re demonstrating our commitment to an innovative, commerce-ready ecosystem by enabling it for the settlement of cross-border transfers, vendor payments and in the future for additional payment use cases like payouts and bill pay.”

While holding onto PYUSD can potentially help you maximize your earnings, you can use your rewards at any time in a few ways, including: 

• Foreign transactions, such as remittances, without transaction fees 
• Send rewards directly to other PayPal or Venmo users
• Convert rewards into US dollars for your PayPal or Venmo balance 
• Make purchases using PayPal Checkout
• Convert rewards to other cryptocurrencies
• Send onchain to supported ethereum and solana blockchains 

You can opt in or out of the program at any time and redeem your rewards for US dollars.

However, it’s important to note how earning crypto rewards differs from earning US dollars. If you put money in high-yield savings account with a 3.7% APY, for instance, any money you earn in interest retains its value. So if you earned $5 in interest, you’ll still have that $5 next month, even if the account’s APY changes.
In contrast, if you earn 3.7% rewards in PYUSD valued at $40 one day, it could be worth $3 next month (or the next day). Crypto, similar to the stock market, fluctuates in value but is considered much more volatile. HYSA rates also tend to move in the same direction as the central bank and don’t typically rise or fall drastically. 

There are also tax implications to selling and using crypto. If you hold your crypto for less than a year before selling or spending it, it’s taxed at your ordinary income rate.

If you sell or trade crypto, it’s best to speak with a tax professional when it’s time to file your taxes. 

A new partnership with Coinbase 

PayPal’s stablecoin news also includes a new partnership with Coinbase. PayPal and Coinbase, a popular cryptocurrency exchange, partnered on Thursday to explore more ways to use stablecoin, PayPal said in a statement. As a part of the partnership, Coinbase will offer fee-free purchases and 1:1 redemption of PYUSD. The partnership will also expand the availability of PYUSD to Coinbase customers and financial institutions. 

PayPal and Venmo customers can also redeem PYUSD for US dollars on Coinbase platforms.