PYUSDx reaches $100M as M0 CEO explains business stablecoin model

PayPal, M0, and MoonPay have publicly launched PYUSDx after three products processed about $100 million through the business stablecoin platform.

M0 CEO and co-founder Luca Prosperi told crypto.news that PYUSDx gives businesses control over token rules, revenue, and administration that they would not receive by integrating PayPal USD directly.

PayPal, MoonPay and M0 introduced the platform in February as infrastructure for developers seeking to issue application-specific stablecoins without building the underlying token and reserve systems from scratch.

With the public launch, Saturn, Concrete, and Cap are using PYUSDx for three different products. Saturn operates a Bitcoin-backed lending product, Concrete runs an onchain investment vault, and Cap provides a credit platform.

According to Prosperi, the three products have processed about $100 million through the platform. The figure refers to processed volume rather than PYUSDx circulation or the value of reserves held against the tokens.

PYUSDx gives businesses control over token rules

A business can integrate PYUSD as an existing stablecoin or use PYUSDx to deploy a separate token with custom settings. Prosperi said the second option allows a builder to set administrative roles, compliance controls and upgrade policies for its product.

“When you hold someone else’s stablecoin, you use its programming and rulebook,” Prosperi said.

With a direct PYUSD integration, functions such as freezing, pausing, forced transfers, minting, and burning follow rules established by the issuer. Prosperi said most roles attached to a custom PYUSDx token instead belong to the business that deployed it.

Each builder can choose an administrator, apply compliance controls under its own policy, and determine how software upgrades are handled. According to Prosperi, a business can automatically adopt M0’s audited upgrades or follow its own process.

The model also gives businesses a share of the economics created by their tokens. Prosperi said revenue generated by PYUSD goes to its issuer, Paxos, while revenue accruing on the PYUSDx that backs a custom token can be sent to a treasury selected by the builder.

PYUSDx tokens are non-rebasing, meaning holder balances do not change automatically as revenue accumulates. The business can use the proceeds to reduce fees, fund rewards for holders, or add the money to its profit and loss account, according to Prosperi.

“The float economics that historically belonged to the issuer now sit one layer out, with the builder.”

Prosperi also said builders can use a template that accepts other approved stablecoins as backing, with separate limits for each asset. Wrapping and unwrapping occur one-to-one through a common swap facility, while transfers between supported blockchains use a burn-and-mint process.

Custom tokens carry three layers of backing

Every business-issued token is backed one-to-one by PYUSDx held in an onchain contract, according to Prosperi. Users can inspect the contract to verify the amount of backing attached to the token.

PYUSDx is backed by PYUSD held in reserve by MoonPay Digital Assets Limited, the issuer of PYUSDx. PayPal USD is issued by Paxos Trust Company, N.A., against dollar deposits, U.S. Treasuries, and cash equivalents.

The reserve structure runs from the custom token to PYUSDx, then from PYUSDx to PYUSD, and finally to the assets held against PYUSD. Prosperi described every link in the structure as fully reserved.

Responsibilities are divided among the participating companies. M0 supplies the onchain infrastructure and does not handle funds, while MoonPay manages the reserves supporting PYUSDx and Paxos holds the assets backing PYUSD, according to Prosperi.

Paxos operates as a national trust bank regulated by the U.S. Office of the Comptroller of the Currency. The OCC has proposed reporting requirements under the GENIUS Act for payment stablecoin issuers subject to its supervision.

Under the proposal, covered issuers would file a confidential report with the OCC each week for every payment stablecoin they issue. A separate quarterly filing would provide additional information required under the federal stablecoin framework.

PayPal has also extended PYUSD to more payment infrastructure since announcing PYUSDx. In July, the company added PYUSD to Polygon through the network’s Open Money Stack, which combines wallets, compliance tools and fiat conversion services.

Polygon Labs said the integration allows businesses to accept funds through cards, bank accounts or exchange balances, settle transactions in PYUSD and convert the stablecoin into local currencies through one system.

Shared reserves allow tokens to convert at par

Stablecoins with separate reserve pools may depend on individual markets and liquidity providers for conversions. Prosperi said the business-issued tokens on PYUSDx operate as different wrappers around the same underlying PYUSDx asset.

Moving from one custom token to another requires the first token to be unwrapped into PYUSDx before the second token is created through the wrapping process. According to Prosperi, the shared swap facility completes the conversion at par without a spread.

Projects do not need to fund separate liquidity pools for the process. Prosperi said the common backing also removes the need to establish a secondary market between each pair of business-issued tokens.

“There is no secondary market to bootstrap because there is nothing to price: the tokens are the same asset wearing different policies,” Prosperi said.

He compared the arrangement with deposits held at different banks that clear at par through a common settlement asset. Under the PYUSDx structure, the settlement asset is fully reserved, and a smart-contract transaction handles the clearing process, he added.

A fiat conversion follows several steps. Prosperi said users first exchange the custom token for PYUSDx at par, convert PYUSDx into PYUSD, and then use an off-ramp or redemption service that supports PYUSD-to-dollar transactions.

M0 uses the same swapping and bridging tools across its other tokenized finance products. Prosperi said the infrastructure currently makes Saturn’s and Cap’s tokens interchangeable and could later connect PYUSD-backed tokens with digital dollars supported by different reserves.

In June, Mastercard included PYUSD settlement in a service spanning Ethereum, Solana, Polygon, Base, Arbitrum, Canton, Tempo and the XRP Ledger.

Mastercard said the service allows issuers and acquirers to settle card transactions during weekends, holidays, and outside standard banking hours. Its existing security controls, fraud protections and dispute procedures remain part of the settlement process.

Payment use depends on velocity and counterparties

PYUSDx has entered public use through lending, credit, and investment products rather than consumer payments. Prosperi said DeFi-focused businesses formed the first group because onchain systems are already part of their standard operating tools.

According to Prosperi, blockchain activity can show whether a business-issued token has moved from collateral use into payments. He identified token velocity and counterparty mix as the two measurements he follows.

Velocity measures transfer volume against outstanding supply. Collateral often remains in one location, while a token used for payments moves between addresses more frequently.

“If a PYUSDx token’s velocity stays at DeFi levels a year from now, it has not left the building,” Prosperi said.

Counterparty mix tracks the destinations of transfers and the amount of activity moving toward fiat. Prosperi said merchant settlement and payroll use would appear as small, frequent transfers to addresses that are not smart contracts, along with unwrap-to-fiat transactions.

Distribution will determine whether such activity develops across PYUSDx products, according to Prosperi. Companies with millions of existing users will decide whether the infrastructure becomes part of everyday payments and merchant settlement.