PayPal 's new stablecoin — known as PYUSD — has the potential to facilitate payments , but it must overcome several headwinds before it takes off, Bank of America said.
"Over the longer term, we expect PYUSD to experience additional adoption headwinds as competition from [central bank digital currencies] and yield-bearing stablecoins increases," the analyst added.
"Over the longer term, we expect PYUSD to experience additional adoption headwinds as competition from CBDCs and yield-bearing stablecoins increases," he said.
"Investors may have been fine holding non-yield bearing stablecoins, such as USDT and USDC, when rates were close to zero, but yield-bearing stablecoins will likely become increasingly available and attractive."
Instead, Bank of America expects PYUSD to target the "largely untapped" market for blockchain-enabled asset transfers, payments and remittances.
Persons:
—, headwinds Shah, PYUSD, Shah, — CNBC's Michael Bloom
Organizations:
PayPal, Bank of America
Locations:
U.S