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PayPal is jumping aboard the cryptocurrency train.
Passengers: Square, Robinhood, Fidelity, Facebook (among others). Destination: the future.
On Wednesday, PayPal announced new features that will allow customers to buy, sell, hold and pay with cryptocurrency within their accounts. Initially, it will support the digital currencies Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
The payments giant is one of the largest financial services providers to venture into the world of cryptocurrencies, following its competitor Square, whose founder Jack Dorsey is a longtime supporter of Bitcoin and his peers. Starting early next year, the 346 million PayPal customers will be able to purchase the network’s 26 million merchants with digital currency, which the service will convert into fiat currency for merchants to receive.
While cryptocurrency volatility in the market has posed a risk to buyers and merchants in the past, PayPal believes its conversion services will reduce that risk, as PayPal itself will manage price fluctuations as merchants get their traditional money. According to the company, this move “will significantly increase the usefulness of the cryptocurrency”.
A global change
The move comes as central banks around the world are also exploring cryptocurrency, with seven major banks, including the Federal Reserve and the European Central Bank, recently creating a framework for issuing global digital currencies and the Bank. Chinese people testing their own digital currency. And a survey by the Bank for International Settlements found that 1 in 10 central banks, which represents about a fifth of the world’s population, plan to issue their own digital currencies within the next three years.
“The shift to digital currencies is inevitable,” PayPal CEO Dan Schulman said in a statement. “We look forward to working with central banks and regulators around the world to offer our support and to contribute significantly to shaping the role digital currencies will play in the future of global finance and trade.”
According to PayPal, customers will be able to buy, sell and hold cryptocurrency in their digital wallets starting in the next few weeks.
PayPal also said it plans to bring its cryptocurrency services to its peer-to-peer payments subsidiary, Venmo, by mid-2021.
Shares in the company were up nearly 5% following the news.
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