Ah, it's always in the small-text (Note [2] at the bottom of https://www.paypal.com/us/digital-wallet/manage-money/crypto/pyusd):
> PayPal Balance account required to access cryptocurrency. When you buy or sell cryptocurrency, including when you check out with crypto, we will disclose an exchange rate and any fees you will be charged for that transaction. For currencies other than PYUSD, the exchange rate includes a spread that PayPal earns on each purchase and sale. Learn more about cryptocurrency fees.
So, it is not clear to me whether you would be able to exchange monero for PYUSD in some non-KYC exchange, but from this I gather that the only way to actually pay a vendor using PYUSD would be to have a PayPal account that is tied to your identity.
Furthermore, their smart contract has a built-in "asstProtectionRole" that allows them to uni-laterally freeze the balance in any account.
You can find the read-me in their github project here: https://github.com/paxosglobal/pyusd-contract
Here is an excerpt:
> ### Asset Protection Role
>
> Paxos Trust Company is regulated by the New York Department of Financial Services (NYDFS). As required by the regulator,
Paxos must have a role for asset protection to freeze or seize the assets of a criminal party when required to do so by
law, including by court order or other legal process.
>
> The assetProtectionRole can freeze and unfreeze the PYUSD balance of any address on chain.
It can also wipe the balance of an address after it is frozen
to allow the appropriate authorities to seize the backing assets.
>
> Freezing is something that Paxos will not do on its own accord,
and as such we expect to happen extremely rarely. The list of frozen addresses is available
in isFrozen(address who).
You can see the actual function here.
I don't see this as much of an improvement over using PayPal and a bank. Maybe it can be useful if you want to move crypto into an asset that you can pay with in regular online purchases without going through an exchange. But PayPal will still play the role of the intermediary that knows you. Storing value in an asset that can be frozen by PayPal is absolutely not desirable. So I think that this coin is kind of a gimmick.
But it could have a positive influence in that online vendors might become more accustomed to accepting crypto payments, and it could help adoption in the long run. Let's hope.