PayPal Rolls Out Crypto Features Enabling Payments At 26 Million Merchants Worldwide
Payments giant Paypal will soon support buying, selling and holding crypto according to a long-awaited announcement on Wednesday, October 21.
Paypal cited an accelerating need for digital payments solutions during the COVID-19 pandemic combined with interest in digital currencies from central banks and consumers as the catalyst for the launch of crypto features. Within the next couple of weeks Paypal customers in the United States will be able to buy, sell and hold Bitcoin, Ethereum, Bitcoin Cash or Litecoin directly from their Paypal accounts. Paypal plans to expand crypto offerings to its subsidary Venmo and abroad by the end of 2021.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” Dan Schulman, president and CEO of PayPal said.
PayPal’s adoption of cryptocurrency is tagged as a gateway to mass adoption of cryptocurrency. Account holders will be provided with educational resources on cryptocurrencies in part due to the company being granted a first-of-its-kind conditional Bitlicense by the New York State Department of Financial Services intended to provide instiutions with a well-regulated way to dive into the crypto space.
The support from PayPal means crypto holders will be able to utilize their tokens at any of PayPal’s 26 million merchants worldwide. While the step forward in crypto acceptance is a strong signal for the market, regulatory uncertainty clouding crypto is likely a concern for both PayPal and its clients.
On the client side, US citizens are required to report all crypto transactions to the Internal Revenue Service, a process which will likely become more extensive once crypto users can utilize their holdings for everyday purchases via PayPal.
PayPal has set some ground rules for customers including that users can only hold the crypto they buy in their PayPal accounts, causing some members of the crypto community to raise concerns that users would not be able to custody their own crypto. In addition to this, users will not be able to transfer their crypto to other accounts on or off PayPal. Ripple CEO Brad Garlinghouse added to the discussion that while its exciting to see a large payments player entering the space, it is disappointing to see some of the original tenents of crypto abandoned.
The payments giant says it is not providing clients with keys as a loss protection provision. There is also a $10,000 weekly buying cap and a $50,000 limit per 12-month period. All trades must be executed in U.S. dollars, according to the announcement.
By Emily Mason