According to a PayPal press release on Oct 21, the payments giant is ready to let users buy, sell, and hold BTC, LTC, BCH, and ETH. The company decided on the move in a bid to encourage the global use of digital coins, according to PayPal CEO Dan Schulman.
PayPal plans to launch crypto support in partnership with cryptocurrency brokerage firm Paxos, which will provide the payments platform with trading and custodial services. The move will enable its 26 million worldwide merchants to accept crypto as payment from over 346 million users globally.
PayPal revealed that it is the first entity to be approved for a conditional Bitlicense from the New York State Department of Financial Services (DFS). The license should allow users in the US to create a digital wallet and buy crypto in the coming weeks, after which the merchant aspect will be enabled early next year.
Schulman explained that his company intends to work with central banks and regulators to meaningfully contribute to shaping the role of crypto assets in the future of global finance and commerce.
Pushing Crypto Further into the Mainstream
PayPal’s decision to unleash digital assets onto its client base will likely spark the widespread adoption of BTC and other top crypto assets, given their broad reach.
The service will initially only be available for US users, but PayPal says it will expand crypto support to other countries and its Venmo wallet app in 2021.
Reacting to the news, venture capitalist Marc van der Chijs commented on Twitter that the service could initiate the next mega-bull run by facilitating millions of users to transact in crypto.
Another Twitter user, Matt Odell, was optimistic about the new service. He argued that the idea made sense from both a compliance and security viewpoint and would become the industry norm in a few years.
PayPal now joins the likes of Jack Dorsey-led FinTech Square.inc and trading app Robinhood, which already allow users to use digital assets for everyday transactions.
The online payment network’s CEO sees the move to support crypto as a way to ready his platform in anticipation of the widespread rollout of central bank digital currencies (CBDCs).
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption, and interoperability of these new instruments of exchange,” Schulman added.
Must Merchants Use Fiat?
While the news that PayPal will launch crypto support seems bullish, some members of the crypto community are highlighting one big caveat: Crypto payments processed by the platform will be settled in fiat currencies.
Charles Hayter, the CEO of CryptoCompare, noted that while the PayPal service would boost crypto adoption, the payments platform would not offer a true on-ramp to the crypto ecosystem.
Merchants will not interact with the incoming cryptocurrency or any blockchain-based apps, which partly defeats the entire purpose.
Crypto users on Reddit lamented the fact that users will be unable to use their crypto outside their PayPal wallet or send digital assets to other PayPal users. Therefore, people will likely end up completely disconnected from the real thing, never actually having their own private keys.