MoonPay is shifting gears.
Known for allowing users to purchase cryptocurrencies with a credit card, the company is now moving deeper into the financial infrastructure. It partnered with M0 to launch PYUSDx, a framework that allows developers to create application-specific stablecoins backed by PayPal USD.
This transforms PYUSD from a simple token into a launch pad. Instead of going through months of regulatory work to issue a digital dollar, developers can create custom stablecoins backed by PayPal.
The bigger question is whether this will usher in a new era of programmable currency or end up dispersing liquidity among dozens of niche tokens.
Introducing PYUSDx, a stablecoin tokenization framework from PayPal, @M0and MoonPay.
Backed 1:1 by @PayPal USD
Let’s build together. pic.twitter.com/oLu6KDpopo
-LunePay
Backed 1:1 by 
Go from build to launch in days, not months
Specially designed for broadcast, distribution and interoperability
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What are PYUSDx and Moonpay actually?
Normally, companies accept an existing stablecoin like USDC or attempt to launch their own, which is costly and complex. PYUSDx falls in between.
It works like a white label layer. A gaming studio or fintech app may issue a branded stablecoin, but the underlying reserves are held in PayPal USD. MoonPay and M0 manage the infrastructure, so developers don’t 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. This allows apps to add custom features, such as 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 distribution, PayPal is expanding PYUSD by allowing other platforms to use it. Each application launched through PYUSDx increases demand for the underlying asset.
This corresponds to a broader shift in the industry. Banks, payment processors and fintech companies are racing to control stablecoin infrastructure. MoonPay positions itself as back-end plumbing, targeting application-layer use cases, including AI-enabled platforms, rather than just retail token issuance.
The catch: it’s not quite PayPal money
Everything is not upside down.
The biggest problem is interoperability. Tokens launched through PYUSDx are not the same as standard PYUSD on exchanges or in PayPal. They will not be supported directly in PayPal or Venmo wallets.
This creates a closed loop. If you win a branded stablecoin in an app, you will likely need to re-exchange it for regular PYUSD or another asset before cashing out. This adds friction.
(Source: Daily volume of stablecoins on the Ethereum chain / TheBlock)
There is also a risk of liquidity fragmentation. If dozens of apps launch their own versions, liquidity becomes spread across many smaller pools rather than concentrating on a single deep market like USDC. Although the framework is designed to handle this, it introduces additional complexity.
For most users, this may look like backend infrastructure. In practice, this could reshape the way money flows through apps while adding new layers between income and spending.
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