If it was actually "backed by deposits" then you wouldn't need it. You would simply transfer those "deposits" around.
So what they're actually doing is bypassing banking legislation and attempting to do fractional reserve banking with no licence. They're also trying to bypass official currency and counterfeit their own shit. People need to start doing time for this because it is ridiculous that these clowns think they can just skip past a thousand years of legislation. Minting your own coins? People used to get beheaded for this.
The currency is regulated by NYDFS which has specific regulations for how stablecoins must be backed. TL;DR: 1:1 backing by T-bills and deposit accounts at regulated banks. There is certainly fractional reserve banking going on within those depository banks, but not specifically by PayPal. https://www.dfs.ny.gov/industry_guidance/industry_letters/il...
So what they're actually doing is bypassing banking legislation and attempting to do fractional reserve banking with no licence. They're also trying to bypass official currency and counterfeit their own shit. People need to start doing time for this because it is ridiculous that these clowns think they can just skip past a thousand years of legislation. Minting your own coins? People used to get beheaded for this.