PayPal Holdings Inc. is launching its own stablecoin, PayPal USD (PYUSD), according to Bloomberg.

This is the first stablecoin from a major financial institution, which could become a significant driver for the gradual adoption of digital tokens for payments.

PYUSD is fully collateralized by U.S. dollar deposits, short-term Treasury bills and similar cash equivalents. It is pegged to the dollar and will be made available to PayPal customers in the United States on a rolling basis.

With PYUSD, CEO Dan Shulman aims to cement PayPal’s dominance in digital payments by building on technology that enables instant and cheaper transfers without a central intermediary.

“The vision over time is that this becomes a part of the overall payments infrastructure,“ he noted.

PYUSD is designed to be permanently exchanged for dollars and can also be exchanged for other cryptocurrencies available on the PayPal network. It can be used to fund purchases and will soon be available in PayPal’s popular Venmo payment app. Eventually, users will be able to transfer their tokens between PayPal and Venmo wallets. The coin will also be able to be moved to compatible third-party wallets outside the PayPal network.

PayPal, which has more than 431 million active accounts worldwide, first launched cryptocurrency services in 2020. It allows users to buy, sell and make payments in various tokens, such as bitcoin, through its platform.

As a reminder, PayPal shares are down 33% over the past 12 months, ranking sixth among the worst performers in the Nasdaq 100 index. This is due to the fact that the surge in online payments caused by the pandemic has faded.

Stablecoins are cryptocurrencies that are pegged to an asset such as the dollar. They have been around for nearly a decade, but are primarily used by traders to move digital assets between exchanges and have made limited inroads into consumer payments.