Payment processing giant PayPal just announced its venture into the world of cryptocurrencies. PayPal’s over 340 million customers will now be able to buy, and hold cryptocurrencies such as Bitcoin, Ethereum and more.
Important to note – PayPal users cannot sell their crypto or transfer them to other accounts. As of writing, PayPal’s T&Cs state that “Crypto in [the Paypal] account cannot be transferred to other accounts on or off PayPal.” This likely means that the crypto held in a PayPal account can only be used to pay for transactions.
Earlier this year, PayPal had also written to the European Commission regarding its work on developing crypto capabilities. It had also been continuously evaluating and monitoring global developments in the crypto and blockchain space. Simultaneously, PayPal had expressed that it was involved with Facebook’s Libra project (although it dropped out later).
Even before this development, the company had been in a long-standing partnership with Coinbase, which had added support for PayPal and credits back in 2016. US Coinbase users could sell BTC and have the funds thus obtained deposited into their PayPal wallets. At the beginning of 2020, PayPal had also been hiring for its Blockchain Research Group.
Paypal’s entry into the crypto market, therefore, has come after a long journey of developing capabilities and partnerships. For this newly launched service, the brand has partnered with Paxos Trust Company.
What’s in Store for PayPal Customers?
Perhaps the most exciting part about the company’s entry into this market is that customers will be able to shop at the nearly 26 million merchants that are part of the PayPal network. But this will only be available from 2021.
As of now, only US account holders will be able to sell, buy and hold cryptocurrencies in their wallets over the coming weeks. By 2021, it is expected that this would expand to PayPal’s subsidiary Venmo, and some other countries as well.
PayPal’s First Conditional Crypto License
Dan Schulman, the President and Chief Executive of PayPal has expressed that they are working with central banks and thinking of all forms of digital currencies. With this development, the comapny expects that global use of virtual coins would be encouraged.
While PayPal is not the first fintech brand to do this, its entry into this domain is expected to have a significant impact owing to its vast reach. However, they have obtained the first conditional cryptocurrency license from the New York State Department of Financial Services.