Paxos, the company that manages PayPal's fintech stablecoin operations, accidentally issued $300 trillion worth of unsecured PYUSD tokens on the blockchain on Wednesday, October 15. The company acknowledged the error in a statement on its website, and Barron's cited the amount. Thirty minutes later, the assets were "burned," meaning they were removed from the decentralized registry, Barron's added.

"Paxos immediately identified the error," the company said on Social Media X. - It was an internal technical error. There was no security breach. Customer funds are safe. The root cause has been resolved."

PayPal shares fell 2.8% to $66.05 in trading Thursday. This was the lowest closing price since September 10. Since the beginning of 2025, the securities have fallen in price by almost 23%.

What does this mean for the industry?

The situation has exposed a number of key issues related to digital assets and the growing role of stablecoins, which have become systemically important to the crypto economy, Barron's writes.

The Paxos case showed that issuers of stablecoins can first issue tokens and only then back them up with real assets. One of the key conditions for the stability of such digital currencies is to back each token with a dollar or equivalent at a one-to-one ratio. This is also a critical factor in the acceptance of stablecoins by regulators and lawmakers. The GENIUS Act, passed by Congress this summer, establishes basic rules for regulating dollar-denominated stablecoins, including the requirement to hold full collateral in U.S. currency or short-term government bonds controlled by federal or state regulators.

That Paxos could so easily print such a huge amount without having any real reserves for that issuance should raise serious questions, Barron's noted, including about the security of stablecoins. There has already been an example in history of where this could lead to with the minting of unsecured cryptoassets: in 2022, the collapse of TerraUSD, which was not backed by physical reserves in dollars or Treasuries, was the trigger for a massive crypto market collapse, the publication recalled.

The fact that a single internal error could create an unsecured $300 trillion in the crypto ecosystem - even if only for a short time and without negative consequences - clearly shows: not all of the crypto industry is truly decentralized, i.e. secure. Stablecoins and their issuers are centralized and therefore carry concentrated risks, Barron's concludes.

This article was AI-translated and verified by a human editor

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