PayPal has invested in Mesh, a crypto-friendly embedded finance solution, almost completely funding the investment with PayPal USD (PYUSD) – Ethereum-based stablecoin.

PayPal Ventures announced its investment in Mesh Connect startup that focuses on embedded payment infrastructure enabling digital asset transfers, crypto payments, account aggregation and registered securities trading. The distinguishing feature of the funding is that it almost entirely relied on stablecoin assets.

The asset used for investment was PayPal USD (PYUSD), the firm’s proprietary Ethereum-based stablecoin that is 100% backed by U.S. dollars, short-term U.S. treasuries and similar cash equivalents. PYUSD, issued by Paxos Trust, has been used as the funding instrument for a PayPal Ventures investment for the first time since it was launched in August 2023. The digital asset funds were transferred on-chain using Mesh’s Application Programming Interfaces (APIs).

“PayPal has an incredible track record of moving the payments industry forward, so it’s no surprise they are at the forefront of stablecoin innovation and share our vision for the future of the industry.”

Bam Azizi, Co-Founder and CEO of Mesh

The investment highlights PayPal’s commitment to innovation in the digital payments landscape. Fresh funding follows Mesh’s $22 million Series A funding round, backed by new investors including Money Forward, Inc., Galaxy, and Samsung Next.

Founded in 2020, Mesh has a vision to build an open, connected, and secure financial ecosystem. It has already secured integrations to over 300+ platforms, providing enterprise clients with embedded digital asset transfers, crypto payments, account aggregation, and trading. Crypto transfers and payments are integrated directly into existing platforms, eliminating the need for users to switch between platforms.

Mesh’s proprietary APIs support 300+ exchange and self-custody wallets and 20+ tokens. Partner businesses receive payments in stablecoins or fiat to avoid the risks of crypto market volatility.

PayPal’s chief executive Dan Shulman sees PYUSD as a way to strengthen the firm’s dominance in the field of digital payments. In his opinion, the use of technology that allows instant transfers with less financial costs and without a centralised intermediary will contribute to achieving the goal.

“As the world of financial services undergoes rapid transformation, we believe that user ownership and portability of assets will become a critical building block of product innovation, with crypto serving as the first beachhead where this is possible.”

Amman Bhasin, Partner at PayPal Ventures

PYUSD is the first stablecoin issued by a large financial company. The token can be exchanged for fiat USD or other cryptocurrencies available on the PayPal network at any time or used for online purchases. Since September 2023, the stablecoin has been available in the PayPal Venmo payment app, and its users can send their tokens between PayPal, Venmo and compatible external wallets.