MoonPay PYUSDx Framework Is Bringing App-Specific Stablecoins to the Mainstream
BY
Ben Graham
|
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MoonPay is shifting gears.
Known for letting users buy crypto with a credit card, the company is now moving deeper into financial infrastructure. It has partnered with M0 to launch PYUSDx, a framework that lets developers create application-specific stablecoins backed by PayPal USD.
That turns PYUSD from a simple token into a launchpad. Instead of navigating months of regulatory work to issue a digital dollar, developers can spin up custom stablecoins backed by PayPal.
The bigger question is whether this unlocks a new era of programmable money or ends up scattering liquidity across dozens of niche tokens.
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What PYUSDx And Moonpay Actually Are
Normally, companies either accept an existing stablecoin like USDC or try to launch their own, which is expensive and complex. PYUSDx sits in between.
It works like a white-label layer. A gaming studio or fintech app can issue a branded stablecoin, but the underlying reserves are held in PayPal USD. MoonPay and M0 handle the infrastructure, so developers do not need to build banking rails from scratch.
These tokens are separate from the main PYUSD issued by Paxos, but they rely on its dollar backing. That lets apps add custom features, like automated payments or AI integrations, without managing compliance and reserves themselves.
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The strategy is clear. Instead of competing head-on with Tether or Circle in terms of circulation, PayPal expands PYUSD by letting other platforms build on it. Every app that launches through PYUSDx increases demand for the underlying asset.
This fits a broader industry shift. Banks, payment processors, and fintech firms are racing to control stablecoin infrastructure. MoonPay is positioning itself as backend plumbing, targeting application-layer use cases, including AI-driven platforms, rather than just retail token issuance.
The Catch: It’s Not Quite “PayPal Money”
It is not all upside.
The biggest issue is interoperability. Tokens launched through PYUSDx are not the same as standard PYUSD on exchanges or inside PayPal. They will not be supported directly in PayPal or Venmo wallets.
That creates a closed loop. If you earn a branded stablecoin inside an app, you likely need to swap it back into regular PYUSD or another asset before cashing out. That adds friction.
(Source: Daily Ethereum On-Chain Volume of Stablecoins / TheBlock)
There is also the risk of liquidity fragmentation. If dozens of apps launch their own versions, liquidity spreads across many smaller pools rather than concentrating in a single deep market like USDC. While the framework is built to manage this, it introduces extra complexity.
For most users, this may look like backend infrastructure. In practice, it could reshape how money flows within apps while adding new layers between earning and spending.
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