Better Stablecoin Buy: USD Coin vs. PayPal USD

You don't invest in a stablecoin. You use one.

USD Coin (CRYPTO: USDC) and PayPal USD (CRYPTO: PYUSD) are both pegged to the U.S. dollar. Hold one for a year, and you'll still have one dollar. Anything else (up or down) is a failure.

Stablecoins aren't about capital gains. They're about utility; moving money quickly, cheaply, and globally without waiting for banks to open. They're the native currency of crypto exchanges, decentralized finance (DeFi) protocols, and increasingly, mainstream payment apps. And behind the two stablecoins I'm comparing today, you'll find two very different public companies: Circle Internet (NYSE: CRCL) and PayPal (NASDAQ: PYPL).

Circle's USDC is the native currency of crypto. It's what you hold on exchanges, or what you use to move money across blockchains without touching a bank. If you're active in the crypto economy, you've probably held USDC at some point; maybe without even thinking about it.

PayPal's PYUSD is different. It lives inside PayPal and Venmo, designed for consumers who want to dip a toe into digital assets without leaving the familiar confines of their favorite payment apps. You can buy it, hold it, and send it to friends, but it's not really meant for the wild west of DeFi.

So the question isn't which one will make you money. It's which fits how you actually use your money.

USDC is the default dollar of the crypto economy

Circle launched USDC in 2018, and it has since become the standard plumbing of the crypto economy. With $73.7 billion in circulation as of Jan. 21, 2026, USDC commands a 24% share of the global stablecoin market. That's second only to Tether (CRYPTO: USDT). Unlike the more controversial Tether, Circle has built its reputation on regulatory compliance and transparent cash reserves.

If you've ever traded on a crypto exchange, you've probably encountered USDC. It's the quote currency for countless trading pairs, the settlement layer for decentralized exchanges, and the asset of choice for DeFi lending and yield protocols.

On-chain transaction volume hit $9.6 trillion in Q3 2025 alone, up 580% year over year. That's not people holding USDC as a store of value. That's money on the move.

USDC lives on more than a dozen blockchains, letting you move dollars across different crypto ecosystems without converting to various native tokens first. For traders, developers, and institutions, it's a universal translator.

The trade-off? USDC is built for people who are comfortable with crypto. You need a wallet, to understand gas fees, and know which chain you're on. So it's powerful, but not exactly plug-and-play.

PYUSD is a stablecoin for the rest of us

PayPal launched PYUSD in August 2023, positioning it as a bridge between traditional finance and digital assets. Unlike USDC, which requires a working knowledge of cryptocurrency mechanics, PYUSD lives entirely inside the popular PayPal and Venmo payment apps. You buy it with a tap, hold it in your existing account, and send it to friends like any other payment. No seed phrases, no chain selection, no learning curve.

That simplicity is the point. PayPal isn't chasing DeFi power users or institutional traders here. It's targeting the hundreds of millions of people who already use its apps, but have never touched crypto.

PYUSD is a gentle on-ramp to the dizzying world of blockchains and digital currencies. It's a way to say "yes, we do stablecoins now" without asking customers to change their existing financial habits.

The trade-off is utility. PYUSD doesn't really exist outside PayPal's walled garden. You can't use it on decentralized exchanges, earn yield in DeFi lending protocols, or move it across a dozen blockchains. It's a stablecoin tethered to a single ecosystem.

For PayPal's target audience, that's fine -- it's working as designed. For anyone deeper into crypto, it's more of a limitation.

Adoption has been slow. PayPal doesn't break out PYUSD circulation in its earnings reports, and the token remains a tiny fraction of the stablecoin market with a $3.7 billion market cap today. The company is betting that mainstream consumer reach will eventually matter more than crypto-native credibility.

That bet hasn't paid off yet, but as a money-moving tool with one foot in the crypto world and the other deep in PayPal's internal operations, PYUSD plays an important role for the company.

Image source: Getty Images.

Pick the stablecoin that fits your money habits

USDC and PYUSD both do the same basic thing: hold your dollars in digital form, pegged 1:1 to the cold, hard greenback. Both even pay interest; USDC typically yields around 3.5% APR through DeFi protocols or crypto exchange accounts, while PYUSD offers 3.75% APR directly in the PayPal app. Not bad for a dollar that's supposed to stay a dollar.

But that's where the similarities end. USDC is for people who live in crypto. From traders and DeFi users to developers moving money across blockchains, USDC is a go-to solution.

Meanwhile, PYUSD is for people who don't want to think about any of that. Its holders are PayPal and Venmo users who want a low-friction way to hold digital dollars without leaving apps they already trust.

There's no "better buy" here, in the traditional sense. Neither token will gain value over time, apart from single-digit annual yields. The question is which tool fits your needs.

If you're active in the crypto economy, USDC is the obvious choice; it's more widely accepted, more liquid, and more versatile. If you just want to park some dollars in PayPal and earn a modest yield, PYUSD does its thing with zero learning curve.

You have a money-managing job to do. Pick the tool that matches that job. For some people, that'll be a bit of both.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.