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PayPal USD Expected to Do Better Than Facebook’s Libra in Stablecoin Market
PayPal‘s stablecoin is likely to succeed where Facebook‘s failed, thanks to the payment giant’s standing in Washington and policymakers’ greater understanding of the issues in the last three years.
PayPal this month said it was launching PayPal USD, a crypto token pegged to the US dollar, making it the second major global company to launch a stablecoin after Facebook, now Meta Platforms, unveiled Libra in June 2019.
The move, which comes as PayPal transitions to a new CEO announced last week, seems risky after Facebook’s stablecoin was crushed by political opposition, and as regulators home in on the crypto sector following several meltdowns.
But PayPal is in a stronger position than Facebook, said former officials, executives and analysts. Policymakers are more familiar with stablecoins, crypto tokens typically pegged to a fiat currency, than they were in 2019. A push to create federal stablecoin regulations has also helped boost their legitimacy in the eyes of lawmakers.
“The world has changed dramatically since Facebook’s Libra project. There was no familiarity with stablecoins whatsoever,” said Christopher Giancarlo, former chair of the US Commodity Futures Trading Commission.
“Since then the administration, Congress and the Federal Reserve have had time to get their minds around stablecoins and stablecoin regulation and there has been very extensive public relations by the industry, including a lot of lobbying.”
In contrast to Facebook, a social media giant that had been under sustained scrutiny over privacy issues and Russian election interference, PayPal is an established financial operator in Washington. It spent $1.13 million (nearly Rs. 9.40 crore) on federal lobbying last year, according to OpenSecrets, and has been lobbying on cryptocurrencies for several years, records show.
“From a policy perspective, there is a seismic difference between Facebook’s Libra and PayPal’s stablecoin,” said Isaac Boltansky, director of policy research for brokerage BTIG.
“There is still a wall between banking and commerce, so knowing that PayPal is very clearly on one side of that wall should assuage lawmakers.”
PayPal and Meta declined to comment.
PayPal USD will be issued by digital trust company Paxos Trust, backed by dollar deposits and US Treasuries, and subject to oversight by the New York State Department of Financial Services.
PayPal launched a stablecoin because it sees itself as a leader in payments innovation, said one person familiar with the plan, and CEO Dan Schulman has said he envisages it will eventually be used for payments. But PayPal expects the stablecoin will mostly be used by US customers to buy and sell other crypto tokens on its platform, the source said.
Dan Dolev, a senior analyst at Mizuho, said PayPal USD is not a game-changer for PayPal investors. “It’s positive noise,” he added.
Grand ambitions
To be sure, some policymakers have concerns. Maxine Waters, the top Democrat on the House Financial Services committee, expressed alarm that PayPal is launching a stablecoin without federal oversight to protect consumers and financial stability. But mostly the reaction in Washington has been muted.
When Facebook unveiled Libra, a stablecoin whose operations were based in Switzerland and which was pegged to a basket of currencies, executives made no secret of their ambitions. They said they wanted to revolutionize the global financial system.
The project ran in to fierce opposition from policymakers alarmed that Libra could give Facebook too much control over the money system, and infringe on users’ privacy. Caught by surprise, regulators were confused about who should oversee stablecoins.
Facebook rebranded Libra, scaled it back and moved the project to the United States, in a bid to win US regulatory approval.
According to one former official with direct knowledge of the matter, the decision on approving Libra coincided with the transition to President Joe Biden’s administration in January 2021. While the Fed had been working on the issue for some time, the decision ultimately fell to the new Treasury Secretary Janet Yellen. She wanted time to fully analyze the issues, this person said.
Tired of waiting, Facebook sold the venture in January 2022.
The White House and the Fed declined to comment. A Treasury spokesperson noted that Yellen has “repeatedly called on Congress to create a comprehensive regulatory framework for stablecoins.”
The Treasury has studied stablecoins over the past two years. After TerraUSD collapsed last year, Yellen said stablecoins did not pose systemic risks. Since then, fears that stablecoins could supplant traditional money have subsided, and the Treasury and Congress have broadly agreed that prudential regulators should oversee them.
“There’s been an awful lot of work done … to understand what the proportional risk of these things is,” said Jack Fletcher, head of policy and government relations at blockchain company R3.
The Fed this month outlined the process for state banks to transact in stablecoins, while the House Financial Services committee last month advanced a bill giving the Fed more power to oversee stablecoins while preserving state regulators’ authority.
The committee’s Republican chair, Patrick McHenry, said in a statement on PayPal USD that Congress should move fast to pass that bill, “enabling stablecoins to achieve their full potential.”
© Thomson Reuters 2023
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YouTube will roll out a slew of artificial-intelligence-powered features for creators, the latest effort from parent company Alphabet to incorporate generative AI — technology that can create and synthesize text, images, music and other media given simple prompts — into its most important products and services.
Among the new products YouTube announced Thursday is a tool called Dream Screen that uses generative AI to add video or image backgrounds to short-form videos, which the company calls Shorts. It also announced new AI-enabled production tools to help with editing both short- and long-form videos on its platform.
“We’re unveiling a suite of products and features that will enable people to push the bounds of creative expression,” Toni Reid, YouTube’s vice president for community products, said in a blog post timed to the announcement Thursday. The Google-owned video platform first announced that it was developing the tools in March.
Google has been under pressure to show results and practical applications for its generative AI products. Some critics have been wary the company, which has long been seen as a leader in artificial intelligence, was falling behind upstarts like OpenAI or rival Microsoft, and that the products Google was rolling out weren’t yet ready for public consumption. OpenAI’s ChatGPT and a new Bing chatbot from Microsoft — which has invested $13 billion (nearly Rs. 1,08,100 crore) in OpenAI since 2019 — have been wildly popular and gained mainstream favour.
Over the past few months, Google launched its own ChatGPT competitor, Bard, and released a steady flow of updates to the product. It’s also incorporated experimental generative AI features into its most important services, including its flagship search engine, in what the company calls its experimental “search generative experience.” The product generates detailed summaries based on information it’s ingested from the internet and other digital sources in response to search queries.
The announcement of the new features also comes as YouTube is locked in fierce competition with ByteDance‘s TikTok and Meta Platforms‘s Instagram Reels to gain more share of the vertical, short-form video market. YouTube said it now sees more than 70 billion daily views on Shorts, and the new generative AI tools appear to be aimed at attracting even more users and creators and gaining a competitive edge over its rivals.
The company also announced YouTube Create, a mobile app aimed at helping the platform’s creators make video production work easier. The app includes AI-enabled features like editing and trimming, automatic captioning, voiceover capabilities and access to a library of filters and royalty-free music. The app is currently in beta on Android in “select markets,” the company said, and will be free of charge.
Beyond creation, YouTube said it would also provide creators with more tools to get AI-powered insights, help with automatic dubbing of videos and assist with finding music and soundtracks for videos.
© 2023 Bloomberg LP
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WhatsApp has begun rolling out support for a new feature that will allow you to log in to your account using the biometric authentication mechanism on your smartphone. The messaging service will soon allow you to create a passkey — a kind of login credential that eliminates the need to use or remember a password — on your device and use it to securely log in to apps and services using the facial recognition or fingerprint scanner on your device.
Feature tracker WABetaInfo spotted the new passkey feature on WhatsApp beta for Android 2.23.20.4 on Tuesday, that is rolling out to beta users. However, not all users who have updated to the latest beta release will have access to the feature, which is reportedly rolling out to a “limited number of beta testers”. Gadgets 360 was unable to access the feature on two different Android smartphones that are both enrolled in the beta program.
The new Passkeys feature on WhatsApp
Photo Credit: WABetaInfo
The new passkey feature is described as a “simple way to sign in safely” to WhatsApp in a screenshot shared by the feature tracker. This suggests that it could be used to help sign in to other devices via secure authentication on your primary device.
Authenticating using passkeys isn’t a novel concept and the technology is slowly gaining traction online— Google already allows you to log in to a new device by using fingerprint-based biometric authentication for passkeys in place of a password. These passkeys are securely stored on your device and used when biometric authentication is provided.
The screenshot posted by WABetaInfo also states that WhatsApp will store the passkey in the device’s password manager — for most users, that would be the device’s default password store that is handled by Google with autofill support. The feature is also expected to make its way to iOS, where it is likely to be stored in the iOS Keychain.
It is currently unclear whether WhatsApp will also support storing passkeys in third-party apps like Bitwarden, 1Password, or Dashlane. We can expect to learn more about how the feature works when it is rolled out to more users in the beta program and the feature is expected to arrive on all smartphones on the stable channel in the future.
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Britain urged Meta not to roll out end-to-end encryption on Instagram and Facebook Messenger without safety measures to protect children from sexual abuse after the Online Safety Bill was passed by parliament.
Meta, which already encrypts messages on WhatsApp, plans to implement end-to-end encryption across Messenger and Instagram direct messages, saying the technology re-enforced safety and security.
Britain’s Home Secretary Suella Braverman said she supported strong encryption for online users but it could not come at the expense of children’s safety.
“Meta has failed to provide assurances that they will keep their platforms safe from sickening abusers,” she said. “They must develop appropriate safeguards to sit alongside their plans for end-to-end encryption.”
A Meta spokesperson said: “The overwhelming majority of Brits already rely on apps that use encryption to keep them safe from hackers, fraudsters and criminals.
“We don’t think people want us reading their private messages so have spent the last five years developing robust safety measures to prevent, detect and combat abuse while maintaining online security.”
It said it would update on Wednesday on the measures it was taking, such as restricting people over 19 from messaging teens who do not follow them and using technology to identify and take action against malicious behaviour.
“As we roll out end-to-end encryption, we expect to continue providing more reports to law enforcement than our peers due to our industry leading work on keeping people safe,” the spokesperson said.
Social media platforms will face tougher requirements to protect children from accessing harmful content when the Online Safety Bill passed by Parliament on Tuesday becomes law.
End-to-end encryption is a bone of contention between companies and the government in the new law.
Messaging platforms led by WhatsApp oppose a provision that they say could force them to break end-to-end encryption.
The government, however, has said the bill does not ban the technology, but instead, it requires companies to take action to stop child abuse and as a last resort develop technology to scan encrypted messages.
Tech companies have said scanning messages and end-to-end encryption are fundamentally incompatible.
© Thomson Reuters 2023
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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