Key Points

Paxos stated in a social media announcement that the erroneous issuance of the stablecoin was part of an internal transfer process, and the company "immediately destroyed the excess PYUSD (PayPal stablecoin) after recognizing the error." The total amount of U.S. dollars in circulation globally is insufficient to support $300 trillion of PYUSD—this amount theoretically exceeds more than double the estimated global GDP.

On Wednesday, Paxos, PayPal’s blockchain partner, mistakenly issued $300 trillion worth of PayPal stablecoin (PYUSD), which the company called a "technical error." Cryptocurrency market observers found records of this massive PYUSD injection on the Ethereum blockchain explorer and analysis platform, Etherscan.

Paxos explained in its social media statement that the erroneous issuance was due to an operational mistake in the internal transfer process, stating, "After identifying the error, the company promptly destroyed the excess PYUSD." The statement further added, "This was an internal technical error, with no security vulnerabilities; users' funds are secure, and we have addressed the root cause of the problem." As of the time of publication, PayPal had not responded to inquiries from CNBC made outside of business hours.

Transaction records on Etherscan indicate that the error was corrected about 20 minutes later. PYUSD is a stablecoin linked to the U.S. dollar that PayPal introduced, claiming it is fully backed by dollar deposits, U.S. Treasury securities, and similar cash equivalents. Therefore, PayPal asserts that the stablecoin can be redeemed for U.S. dollars at a 1:1 ratio at any time.

However, this technical error highlights a critical issue: the mechanism by which PYUSD is pegged to the dollar relies on the credit backing from PayPal and its independent third-party verification reports, rather than the inherent and indivisible binding relationship that is typical in the issuance of stablecoins.

From the data, the total amount of U.S. dollars in circulation worldwide simply cannot support $300 trillion of PYUSD—theoretically, this scale would require more than double the current estimated global GDP.

Notably, the backdrop of Paxos' mistake reflects a growing trend as more banks and payment platforms begin to adopt stablecoins, leading these crypto assets toward mainstream acceptance. According to CoinMarketCap, PYUSD is currently the sixth-largest stablecoin, with a market capitalization of over $2.6 billion.