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PayPal has launched a new service that allows its customers to buy, hold and sell cryptocurrency directly from their PayPal account.
The company cited the Covid-19 pandemic as driving the migration to digital payments, as well as the growing interest in digital currencies by central banks and consumers, as behind the move.
Cryptocurrencies on the initial list include Bitcoin, Ethereum, Bitcoin Cash and Litecoin, with expansion plans to Venmo and “selected international markets” in the first half of 2021. The company has also obtained a conditional Bitlicense from the New York State Department. Financial Services (NYDFS).
There is an important distinction to be made here, as the company notes:
“PayPal customers will be able to use their cryptocurrency holdings as a source of funding to pay at PayPal’s 26 million merchants worldwide. Consumers will be able to instantly convert their selected cryptocurrency balance into fiat currency, with certainty of value and without incremental fees.
“Indeed, cryptocurrency simply becomes another source of funding within the PayPal digital wallet, adding advanced utility to cryptocurrency holders, while addressing previous concerns regarding the volatility, cost and speed of transactions based. on cryptocurrency. “
Ultimately, cryptocurrency payments processed by PayPal will be settled in fiat currencies. Furthermore, there is currently little or no interoperability. Three questions on a PayPal cryptocurrency FAQ page – which isn’t readily advertised in its press materials – provide more information about the options available:
Can I use cryptocurrencies to pay or send money with PayPal?
At the moment, you cannot use Crypto as a way to pay or send money on PayPal.Can I use my cryptocurrency balance as a funding source for my purchases?
No, not right now.Can I transfer cryptocurrency into and out of PayPal?
At the moment, you can only keep the cryptocurrency you buy on PayPal in your account. Also, the cryptocurrency in your account cannot be transferred to other accounts on or outside PayPal.
Despite the warnings, however, this certainly represents an interesting development, particularly given that PayPal was one of the payment providers that ditched the Libra project last year. Libra itself made a strategic shift in April to tie more closely to local currencies, citing regulatory hurdles. The service as it is can be seen as similar to Robinhood right now, as industry analysts have noted.
“Our global reach, our expertise in digital payments, our bilateral network and rigorous security and compliance controls provide us with the opportunity and responsibility to help facilitate the understanding, redemption and interoperability of these new tools. exchange, “Dan Schulman, PayPal’s president and CEO, said in a statement.
“We look forward to working with central banks and regulators around the world to offer our support and to make a significant contribution to shaping the role digital currencies will play in the future of global finance and trade,” he added. Schulman.
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