Ultimate Resource On PayPal’s Involvement With Bitcoin And The Crypto-Currency Industry
The rumors are now fully confirmed. Ultimate Resource On PayPal’s Involvement With Bitcoin And The Crypto-Currency Industry
PayPal announced on Wednesday its entry into the cryptocurrency market, according to multiple reports.
The payments will be settled through fiat currencies, similar to many existing crypto merchant solutions like BitPay. This means that the merchants will be receiving fiat, as PayPal will take care of the conversion.
The coins initially supported will include Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC), the company said. The payments giant partnered with Paxos to deliver the service, and it obtained a conditional cryptocurrency license from the New York State Department of Financial Services, commonly known as the BitLicense.
In addition to cryptocurrency payments, PayPal users will also be able to purchase crypto directly through the app. PayPal will thus feature a cryptocurrency wallet, letting users buy, sell and hold crypto via the PayPal apps.
PayPal is one of the largest global payment providers, with 346 million active accounts and $222 billion in volume processed in Q2 2020. It was one of the initial founding members of the Libra association, though it subsequently dropped out after regulatory pressure mounted for the project.
Rumors of a planned crypto integration surfaced earlier this year. The company is nevertheless often criticized in crypto circles due to perceived unfair practices and the amount of control it has within its own network.
News of PayPal’s support for crypto assets has triggered a rally in the markets, with Bitcoin trading above $13,000 for the first time since July.
Bitcoin (BTC) has rallied above $13,000 for the first time since July, and only the third time since the all-time high bull run of late-2017.
The move follows the long sustained period of five-figure price action, with BTC having spent nearly the entirety of the past 12 weeks trading above $10,000.
The spike was triggered by news that the global payments giant PayPal is launching support for Bitcoin, in addition to Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).
Quantum Economics founder Mati Greenspan said the rally was almost entirely driven by PayPal.
“There’s no doubt in my mind that this bit of news is almost solely responsible for today’s extended gains.”
BTC is up 10% over the past 24 hours, while ETH is up 8%, BCH is up 9%, and LTC is up more than 15% today.
While Ethereum has rallied alongside Bitcoin, ETH has failed to maintain its strength relative to Bitcoin since rallying into the low-mid $400s amid the decentralized finance boom in August. Ether is currently testing resistance at $400.
In response to the news from PayPal, Alex Mashinsky, CEO of crypto lending platform Celsius, said:
“This is definitely a bullish sign for Bitcoin and other cryptocurrencies. Crypto is all about trust, and PayPal has a very high level of trust with its users […] If the UI/UX of the service is done right, we will see millions of new users join each month.”
Wall St Drives Paypal To All Time High On Bitcoin News
Mainstream investors apparently liked the company’s turn towards crypto.
PayPal (PYPL) reached $215.87 on Oct. 21, a few dollars past its previous all-time high of $212.38, set on Sept. 2, 2020, according to data from TradingView.
This price action came shortly after the payments company announced that it would soon be including crypto assets on its platform. PayPal plans to integrate Bitcoin (BTC), Etheruem (ETH), Litecoin (LTC), and Bitcoin Cash (BCH) offerings into their network in 2021.
Opening the trading day at $206.20, PayPal quickly rose past its all-time high, but just barely — breaching the level by about $0.14. The asset subsequently fell lower before breaking the previous high with conviction, rising past $215.
Bitcoin has also reaped the benefits of PayPal’s news, briefly reaching $12,900— a $1,000 price increase over 24 hours. The price has dipped back to $12,750 at time of publication.
Not everyone is impressed, however. Crypto analyst PlanB described the news as anticlimactic in a tweet, noting that customers will not be able to transport their digital assets off of PayPal, based on an FAQ page on the company’s website.
“Currently, you can only hold the Cryptocurrency that you buy on PayPal in your account,” the page says. “Additionally, the Cryptocurrency in your account cannot be transferred to other accounts on or off PayPal.”
PlanB reconsidered his sentiment in a follow-up tweet, noting Bitcoin’s price action in response to the development, as well as the potential mainstream crypto access PayPal may add.
PlanB is known around the crypto industry for his stock-to-flow model which predicts that Bitcoin’s price could rise above $100,000 per coin.
Bitcoin Could Flippen PayPal On Bullish News From… PayPal
Bigger than Disney. Bigger than Netflix. And soon, Bitcoin could be bigger than the company that’s driving its bullish momentum.
Bitcoin has risen dramatically in market capitalization over the years, recently taking its place among the top 25 largest companies and assets by market cap.
At press time, Bitcoin (BTC) holds a market value near $240 billion. The coin is 22nd on a list of the top 100 stocks, exchange-traded funds and cryptocurrencies by market capitalization, according to AssetDash. Apple holds the number-one spot, standing at a $2 trillion evaluation, followed by Microsoft and Amazon, respectively.
Bitcoin had a bullish day of price action following significant news from the payments processing network PayPal. At the time of publication, Bitcoin is only a single position behind PayPal, which holds the 21st spot.
Bitcoin’s market cap is not the highest it has ever been, however. A CoinMarketCap historical snapshot from Dec. 17, 2017 — the date of Bitcoin’s last all-time high — shows the asset boasting a $320.5 billion market cap at a price of $19,140 per coin.
Crypto’s pioneering asset continues to be a tremendous rags-to-riches story. Since its launch in 2009, Bitcoin has soared from pennies to thousands of dollars per coin, fighting numerous battles along the way, while igniting an entire industry around itself and its underlying technology.
Baby Steps or Handcuffs? Crypto Pros Assess PayPal’s Bitcoin Play
Call it Crypto Lite – for now.
Fintech giant PayPal confirmed its long-awaited move into digital assets Wednesday, offering its 346 million users the chance to buy, hold and sell bitcoin, bitcoin cash, ether and litecoin, with the blessing of New York state regulators.
While the cryptosphere acknowledges the bullishness of a firm the size of PayPal making a move into the space, there was also concern the new service does not allow bitcoin or other cryptocurrencies to be withdrawn or deposited. Once you buy the coins, they stay in your account until you sell.
“Currently, you can only hold the cryptocurrencies that you buy on PayPal in your account. Additionally, the crypto in your account cannot be transferred to other accounts on or off Paypal,” states the PayPal FAQ page published with Wednesday’s announcement.
Self-custody and moving your coins around is what crypto is all about though, right?
The view from some informed takes is that while PayPal did not need to impose such restrictions, it’s probably a case of taking things by degree – a “crawl before you can walk” approach.
As such, the current setup is being compared to investment company Robinhood – which also offers crypto but in a confined space – but moving in the direction of Square, which started the same but now allows limited withdrawals to non-custodial wallets.
The lack of withdrawals to self-custody and inability to transfer between accounts constituted “the highlight of the PayPal news” for Jake Chervinsky, general counsel of DeFi platform Compound, who added that such restrictions aren’t required for regulatory compliance. (Chervinsky did not immediately respond to a request for further comment.)
However, it may well be the case that PayPal is simply setting out to cater to what it perceives to be the needs of the average user, pointed out Jerry Brito, executive director of Coin Center, a Washington, D.C.-based think tank.
“Simply allowing people the ability to buy and hold and sell back crypto I imagine is something they studied,” Brito said in an interview. “It may simply be that’s what most people want to do with cryptocurrency at the moment, and the demand to move it around and transact is not as high. And if that’s the case, it’s much easier from a regulatory perspective and from a user support perspective to simply allow that option without having the ability to transact.”
Providing the most obvious route for people to have exposure to the asset class without necessarily getting into the more complex issues of running private keys and understanding cryptography and digital signatures is possibly what PayPal is thinking, said Charles Hayter, CEO and co-founder of data site CryptoCompare.
“Yes, if you’re a pure libertarian, it’s not ideal. But being pragmatic about bitcoin’s trajectory and global adoption penetration rate, this certainly brings more options,” Hayter told CoinDesk.
PayPal Plays It Safe
Brito of Coin Center agreed that to be compliant with regulations, PayPal did not perhaps need to wall in its garden, but he pointed to gray areas like the Financial Action Task Force’s Travel Rule and other areas of anti-money laundering (AML) enforcement, which come into play when transferring crypto in a regulated environment.
“It’s certainly the case that it’s a much bigger hurdle to allow for sending [crypto] than not,” Brito said. “So, sort of top of the list would be the Travel Rule. People are finally developing solutions to comply with that but they are not there yet. This will be a relatively small part of PayPal’s business, so the easiest thing to do is not engage in transfer and take on that compliance risk.”
Stephen Palley, a partner at the Anderson Kill law firm, said the functionality of the PayPal crypto announcement is not important compared to what it says about crypto as an asset class.
“They’re going to be cautious, and they’re going to roll it out slowly,” Palley told CoinDesk, adding:
“My takeaway is that the importance is not the functionality. The importance is from the normalization of the asset class. If PayPal is saying you can somehow use this via our platform, however it works, that takes it one step away from the notion that this is just for criminals.”
PayPal did not return requests for comment.
PayPal Might Issue Its Own Cryptocurrency Soon, Says CoinShares Exec
The CSO of CoinShares thinks that a payments-focused PayPal token could be forthcoming.
Global digital payment giant PayPal might be moving into issuing its own cryptocurrency after officially entering the crypto industry, according to a major industry exec.
Meltem Demirors, CSO at digital asset management firm CoinShares, says that she will not be surprised if PayPal issues its own token after the company broke the news of its soon-to-come support for crypto..
In an Oct. 21 interview with CNBC’s Fast Money, Demirors claimed that PayPal’s supporting crypto could eventually become a basis for launching its own, stating:
“I wouldn’t be surprised if, in the next six to 12 months, we see PayPal launching its own digital currency similar to a digital dollar that we see in many payments companies.”
Demirors said that PayPal might be interested in launching its own token as the company officially left the Libra Association, the governing body of Facebook’s Libra digital currency project. A member of the association at the project’s launch in June 2019, PayPal left the initiative several months after, claiming that it does not want the regulatory scrutiny over Libra to “bleed into their business.”
PayPal CEO Dan Schulman subsequently said that that regulation and compliance are foundational for PayPal as a company trusted worldwide. He also stated that PayPal is developing a product that is “not necessarily competitive with Libra.”
On Oct. 21, PayPal officially announced that the company will introduce the ability to “buy, hold and sell” a number of cryptos including Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) directly with the PayPal digital wallet. With the new feature, PayPal customers will be able to use their crypto to shop at any of PayPal’s 26 million merchants around the globe starting in early 2021.
PayPal’s Move Is Good For Crypto Adoption But Not So Much For Profits: Morgan Stanley
PayPal’s pledge to support cryptocurrency as a funding source for 26 million merchants will likely benefit mass cryptocurrency adoption more than it will boost the payments firm’s bottom line, Morgan Stanley researchers said in a Wednesday report obtained by CoinDesk.
* The move “should expand crypto acceptance online, which to date has stalled at 1% of the top 500 internet retailers,” wrote the Morgan Stanley analysts.
* It is “unclear” if PayPal’s earnings will benefit from that shift. The researchers said bitcoin, bitcoin cash, litecoin and ether funding is “likely immaterial to earnings.”
* “Assuming PayPal is able to scale its crypto trading activity to Square’s current level, it would only add [0.3%] of growth to PayPal’s ~$21.3 billion” revenue base for 2020, they wrote.
* The Reason: Boosting crypto acceptance doesn’t necessarily mean greater transaction volumes.
* Other upsides of supporting crypto include staying competitive with Square and attracting “a new user base” to PayPal, the researchers said.
PayPal’s Crypto Integration Means Bitcoin Could Triple Its User Base
PayPal’s crypto integration may bode well for Bitcoin price as its user base could triple.
Bitcoin (BTC) price has again punched through the $13,000 mark after yesterday’s PayPal’s announcement sparked a powerful rally which drove the price to a new 2020 high.
Currently sitting near $13,100, Bitcoin price has rallied nearly 10% since the announcement and BTC is now close to overtaking PayPal as the 21st biggest asset by market capitalization.
PayPal’s crypto announcement comes two weeks after Square, another payments giant, announced its own foray into Bitcoin by investing roughly 1% of its assets into Bitcoin.
According to Lanre Jonathan Ige, a researcher at Amun AG, the continuing trend of large sized investments will be material in bringing institutional interest to Bitcoin. Ige said:
“Corporations are often trend-following and we can expect a number of other corporations to follow the lead of Square and Microstrategy, as the returns of the assets continue to impress.”
However, the recent news from PayPal is more likely to bring the masses to Bitcoin, rather than Bitcoin to institutions. This is because PayPal may bring a more mainstream audience up to speed with the cryptocurrency as an investment vehicle for now and as a payment method in the future, which has been one of the main focus of the Bitcoin community when it comes to mass adoption.
Paypal Should Boost Bitcoin’s User Base
According to data from glassnode, Bitcoin currently has over 187 million users or “hodlers”. While impressive, crypto analyst Willy Woo noted that this pales in comparison to PayPal’s 487 million users.
By adding Bitcoin, PayPal is bringing the name to a mainstream audience. While it is only possible to buy, sell and hold Bitcoin through PayPal for the time being, the company announced that it would be adding cryptocurrency payment and transfers in 2021. Once this occurs, it could cement Bitcoin’s reputation as a payment and remittance mechanism.
Transacting through PayPal and other centralized platforms could even become one of the ways in which Bitcoin is able to scale to a mainstream user base. Centralized transactions (along with other methods like sidechains and lightning network) could be used to alleviate congestion in Bitcoin’s blockchain, allowing it to be used only for bigger transactions that require more safety, transparency or immutable proof of ownership.
Bitcoin Is On The Path To Outperforming Banks
While it seems that payment processing companies and cryptocurrencies are finding more synergy as time passes, the same can not be said for banks and this struggle is reflected in their stock price.
Jon Erlichman, tech correspondent at BNN Bloomberg, noted that assets like Bitcoin, Ether and stocks for payment companies like PayPal and Square were doing quite well this year but since the COVID-19 pandemic, financial stocks have underperformed.
To date, the prices of Bitcoin and Ether have appreciated by 80.5% and 217%. Meanwhile, PayPal rallied 99% and Square 186%. Banks like JPMorgan and Bank of America, on the other hand, have lost 28% and 32% respectively. Citigroup has seen its stock value drop by 46% and Wells Fargo has decreased by 58%.
As for Bitcoin, it continues to be one of the best performing assets in existence, beating gold and the S&P 500 by a wide margin in 2020.
As a growing number of people interact with Bitcoin as an investment vehicle, it is possible that consumers will turn their backs to banks and invest in cryptocurrency.
According to experts, Bitcoin may even benefit from what some call the ‘Robinhood effect’, a phenomenon where retail investors with disposable income purchase an asset via fee-free, gamified investing platforms in order to avoid the rigamarole frequently associated with banks.
If this happens to BTC, the digital asset could see the same type of hyperbolic investing frenzy that occurred as Robinhood investors poured funds into Tesla earlier this year.
Not Everyone In The Crypto Industry Is Thrilled About Paypal’s Recent News
PayPal’s Bitcoin integration is “probably not because they want to spur healthy adoption,” explained SatoshiLabs.
While many in the industry were pleased with Bitcoin’s surge past $13,200 following an announcement that PayPal intends to integrate crypto into its network, some fail to see any benefits beyond the immediate price movement.
According to an Oct. 21 blog post from Satoshi Labs, the team behind the crypto hardware wallet Trezor, PayPal’s push to start selling Bitcoin (BTC), is “probably not because they want to spur healthy adoption.” Their arguments are similar to ones made by many crypto holders against storing digital assets on exchanges, i.e. “not your keys, not your coins.”
“If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency,” stated the blog post by SatoshiLabs. “No one should consider money held entirely by a third party as owned by them. Time after time, exchanges have lost user funds, often leaving them with no recourse.”
“Long-term, if PayPal proceeds without consulting the community and letting their users control their own keys, it offers no value to the space. The greatest risk is that the clout they carry in traditional electronic payments will be interpreted as expertise in crypto. This would threaten the expert advice so carefully crafted by our community, which could be drowned out by the misinformed masses that PayPal brings to the space.”
Many players in the crypto industry advocate against holding assets on exchanges, which are sometimes subject to hacks, bugs, and general corruption. Even Coinbase, one of the most popular crypto exchanges in the United States, has made waves for crashing when trading turns volatile. In an ongoing situation, Malta-based exchange OKEx hasn’t allowed users to withdraw funds since last week.
Blockchain.com CEO Peter Smith Said Paypal’s Decision Is “Highly Centralized And Inflexible”:
”We saw this with Robinhood, and we’re seeing it again today. Crypto is about financial freedom. It’s modern money that anyone anywhere can truly control. While we’re excited to see a new audience gain access, a non-custodial approach limits opportunity to self-custody your crypto or transact freely.”
The move towards mainstream adoption of cryptocurrency has progressed significantly in 2020, with financial institutions like MicroStrategy purchasing more than $415 million BTC, and Grayscale significantly expanding assets under management in its crypto trusts. PayPal’s decision to custody Bitcoin and potentially offer a cryptocurrency of its own came ahead of the leading digital asset breaking the $13,000 price barrier for the first time since June 2019, and PayPal’s stock rising 5%.
Some players see PayPal allowing its users to make payments in crypto as insignificant in the path to greater adoption, however. “The question is, would someone want to use [Bitcoin on Paypal] for merchant transactions, which is more of an unknown,” said fintech consultancy 11:FS co-founder Simon Taylor in a Reuters interview.
David Birch, director of electronic transactions consultancy Consult Hyperion, agreed, saying he didn’t think PayPal’s move would make “much difference for Bitcoin.”
PayPal In Talks To Buy Crypto Firms Including BitGo
PayPal Holdings Inc. is exploring acquisitions of cryptocurrency companies including Bitcoin custodian BitGo Inc., according to people familiar with the matter, a move that would expand its embrace of digital coins.
PayPal has been holding talks with BitGo, a company that helps investors store Bitcoin securely, and could reach a deal within weeks, the people said, asking not to be identified because the matter is private. Talks could still fall apart and PayPal could opt to buy other targets, the people added.
It couldn’t be learned how much PayPal would pay for BitGo if it goes ahead with the deal. BitGo raised $58.5 million in 2018 at a $170 million valuation, according to PitchBook.
Representatives for BitGo and PayPal declined to comment.
The Palo Alto, California-based company, founded in 2013 by Chief Executive Officer Mike Belshe, offers digital wallets that require multiple signatures for transactions, as well as offline vaults for storing Bitcoin and rival currencies. It was one of the first companies in the space to focus on institutional investors, according to its website.
The company applied in August to New York regulators to become an independent, regulated qualified custodian under New York State Banking Law, a press release showed. Custodians like BitCoin are responsible for safekeeping digital assets using secure storage.
PayPal announced on Wednesday that its customers can buy, sell and hold cryptocurrencies including Bitcoin, Ether, Bitcoin Cash and Litecoin from digital wallets, as well as use the virtual money to shop at the 26 million merchants on its network. The announcement led Bitcoin to surge past $13,000 for the first time since July 2019.
PayPal said it would partner with BitGo competitor Paxos Trust Company, a regulated provider of cryptocurrency products and services for its new service.
BitGo is backed by investors including Goldman Sachs Group Inc., Craft Ventures, Digital Currency Group, DRW, Galaxy Digital Ventures, Redpoint Ventures, Valor Equity Partners and Founders Fund.
Novogratz Calls Paypal’s Bitcoin News ‘The Shot Heard Around The World On Wall Street’
PayPal coming to crypto is big news for adoption, says the investor.
Galaxy Digital CEO and multi-millionaire Mike Novogratz recently hopped on CNBC Squawk Box for an interview, detailing the importance of PayPal’s upcoming 2021 Bitcoin (BTC) launch.
“I think that’s, in some ways, the shot heard around the world on Wall Street,” Novogratz said in an Oct. 23 interview about PayPal’s recent news. “PayPal has 346 million accounts,” he said, adding: “They’re the 30th biggest bank in the U.S. in deposits and all of a sudden every financial institution says, ‘Wait a minute, what am I doing?'”
PayPal plans to add Bitcoin, Ethereum, Litecoin and Bitcoin Cash to its network sometime in 2021. Following the announcement of these plans, Bitcoin surged in price, ultimately overtaking the market cap of PayPal itself.
“If you’re in the board room at Morgan Stanley or Goldman Sachs or Bank of America, you’re thinking, ‘How do I get engaged?'” Novogratz said of crypto. Prior to his interview, the CEO said he took a peak at stock performances for companies involved in crypto, as well as Ethereum’s price. He pointed out that such assets have posted standout price gains in 2020.
“We are going to see, over the next 10 years, a rebuilding of the financial infrastructure of this country,” Novogratz said. “It was interesting that PayPal hired Paxos to do their integration with crypto because there’s a domain expertise in this cryptocurrency space, in this blockchain space, that’s needed.” Paxos serves as the entity behind PAX, one of the many U.S. dollar-pegged stable coins in the crypto industry. The institution also touts other functions, such as custody.
“It was the COVID virus that really accelerated — as horrible as that sounds — accelerated adoption of crypto on two ways: the macro story with Bitcoin and the more maybe important story of digitalization of all cash, digitalization of the financial services system, that’s going to mostly be built on Ethereum.”
Multiple traditional financial players have picked up large stacks of Bitcoin this year, seemingly ushering in an age of mainstream Bitcoin adoption.
Circle CEO Jeremy Allaire Seems To Already Be Using Paypal To Buy Bitcoin
The CEO tweeted a screenshot of an apparent $100 purchase of Bitcoin using the service well ahead of its official rollout date.
There has been significant excitement in the industry since PayPal last week announced its intention to enter the cryptocurrency market. The rollout of its new crypto services — enabling both crypto payments and direct, in-app purchases of crypto — has been officially set for early 2021.
Yet on Oct. 28, the co-founder and CEO of crypto payments firm Circle, Jeremy Allaire, claimed to have used the PayPal app to buy $100 worth of Bitcoin (BTC), tweeting a screenshot of the apparent transaction.
Allaire did not clarify how he had accessed the service prior to its official rollout, nor specify whether he had a promotional arrangement with PayPal to use and advertise the forthcoming service. As of press time, PayPal has not responded to Cointelegraph’s request for comment.
As previously reported, PayPal’s crypto functionality will support Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), alongside Bitcoin. Transactions, while initiated in crypto, will be settled with the site’s affiliated merchants in their local fiat currency.
As of Q2 2020, PayPal had over 346 million active accounts and processed $222 billion in volume. Crypto payments will be supported by its estimated network of 26 million merchants around the globe as of 2021.
PayPal Crypto Services To Go Global Early 2021, Support For CBDCs Coming
PayPal is planning to launch crypto services for users of its platform globally, along with the Venmo app, and the company will explore central bank digital currencies.
Senior executives at global payments giant PayPal have revealed further details about its plans to aggressively push into the crypto sector next year during the firm’s Q3 2020 earnings call, including plans to support central bank digital currencies (CBDCs).
“Clearly the world is rapidly moving from physical to digital,” said PayPal CEO, Dan Shulman, emphasizing the accelerated rate of change within the payments and financial services sectors.
Citing discussions with central banks, regulators, and crypto industry leaders, Shulman asserted: “There is no question that digital currencies are going to be rising in importance, having increasing functionality, and increasing prominence.”
“CBDCs […] are a matter of when and how they’re done, and not if.”
PayPal’s chief executive said that through its scale and prominence the company will “help shape the utility of [CBDCs],” including facilitating interoperability with existing payment rails and fostering acceptance among merchants. Shulman also described the legacy financial system as “not working” for many ordinary people.
“I do think that our platform and all the new digital infrastructure that we’re putting in place right now can help make that management and movement of money more efficient, less expensive, and faster.”
Last month, PayPal announced it would roll-out services allowing customers to purchase, sell, and hold crypto assets, sending bullish reverberations across the virtual currency markets. The roll-out will also see crypto assets supported by PayPal’s merchant network of 28 million vendors.
In the call, PayPal’s executives emphasized the strength of demand for crypto services from its customers already, with its CEO noting: “our base is very eager for us to offer these capabilities.”
While just 10% of PayPal’s U.S.-based users currently have access to its crypto services, Shulman noted the rest of the country expected to come online before December.
“Our waiting list was two to three times what our expectations were.”
“We’re seeing people who have already bought crypto open their wallet several times a day to check out what’s happening with their crypto investments,” he added.
Responding to the demand, Shulman announced that PayPal will increase its weekly crypto purchase limit from $10,000 to $15,000.
Shulman also revealed PayPal’s virtual currency services will be made available to international customers, alongside launching on its mobile payments app Venmo, during the first half of next year.
“Over the course of next year, you’ll see us move into a couple of different areas,” the CEO added.
As PayPal integration looms, Paxos CEO Sees Mass Adoption For Tokenized Assets
Paxos CEO Charles Cascarilla sees a bright future for tokenized assets — possibly through PayPal.
In a panel last week for the London Bullion Market Association, Paxos founder and CEO Charles Cascarilla discussed the growth of Paxos’ gold-backed ERC-20 token, PAXG, and the future of asset tokenization more generally — a future that could well involve his company’s recently-announced integration with financial giant PayPal.
Speaking alongside Fidelity Labs director of product management Raghav Chawla and the LBMA’s Sakhila Mirza, Cascarilla told viewers that an asset-backed gold token was a natural fit for Paxos’ vision:
“It was really a very logical thing for us to launch a gold token given what we’re trying to do at Paxos, which is to be infrastructure for the blockchain-based financial system, the more open financial system that we think is going to evolve from the one we’re in now.”
He mentioned a variety of drawbacks that limit the utility of both physical gold and gold-backed assets exchanged on traditional markets, including limited market hours and high frictional costs inherent in exchanging physical bullion.
Because of their superior liquidity, transferability, and availability in 24-hour markets, Cascarilla sees tokenized gold and other assets as the future.
“The reality is, I think, this trend is really an inevitable trend about where assets will sit,” he said of commodities on-chain.
One major barrier stands in the way, however: building “intertia” towards adoption.
To date, Paxos has tokenized $75 million in gold, or 37,000 ounces — just a fraction of the estimated $7.3 trillion global gold market. Cascarilla notes that widespread adoption is slowed by the prerequisite steps: has to first choose to adopt blockchain, then likewise choose gold as an asset to take on-chain.
He believes, however, that a 5-to-10 multiplier in AUM, bringing the total tokenized gold market above $1 billion, is where the market for tokenized assets would really begin to “cook with fire.”
Moreover, Cascarilla Thinks It Could Happen Soon:
“Some of the partnerships we have in the pipeline will be able to bring digital gold to hundreds of millions, if not billions, of people, within the next 18 months… I think that the adoption curve for both blockchain-based assets, but specifically gold, are very, very bright, and that is where the future is going to be.”
While Cascarilla did not mention PayPal as one of the partners, commentators have speculated that the Paxos/Paypal integration could be the gateway towards mass adoption for cryptocurrencies — and if a behemoth like PayPal were to offer access to tokenized assets, they could be next in line.
And, in spite of what gold bugs like Peter Schiff have been championing, Cascarilla believes gold, in particular, will have to be digitized in order to compete with Bitcoin.
“Having a physical bearer asset only has so much utility in today’s world.”
Will Paypal’s Crypto Integration Bring Crypto To The Masses? Experts Answer
Experts in blockchain technology and crypto take on the question: Could PayPal’s crypto integration help mass adoption?
One of the most discussed topics within the crypto community recently has been PayPal’s announcement that its customers will be able to buy and sell cryptocurrencies. The service is expected to be fully rolled out early next year.
The company’s goal “to increase consumer understanding and adoption of cryptocurrency,” as stated in its press release, seems to be a needed step in cryptocurrency popularization. Mainstream awareness of crypto still remains very low.
As data from a Statista survey indicates, Bitcoin (BTC) use in countries with developed economies is below 10%, with the lowest levels in Sweden, Denmark and Japan. Meanwhile, some optimistically predict that this number will grow to 90% of the U.S. population by 2030.
PayPal’s president and CEO, Dan Schulman, said that “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.”
Similarly, the former prime minister of Malta, Joseph Muscat, told the General Assembly of the United Nations in 2018 that cryptocurrencies were the “inevitable future of money.”
PayPal will begin by offering its services for users with Bitcoin, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), and the company has acquired from the New York State Department of Financial Services what it claims to be a “first-of-its-kind” conditional BitLicense — a license required to operate a digital currency business in New York — and partnered with United States-based stablecoin operator Paxos to enable this service for its customers.
Considering that PayPal had a reported 346 million active users in the second quarter of 2020 — a figure that has since increased in the third quarter to 361 million, according to its latest quarterly report — the decision to offer its customers services related to cryptocurrencies seems to be a significant step toward mainstream adoption.
Last year, Cointelegraph asked experts in the crypto and blockchain industries for their opinions on crypto mass adoption. This time, the question was: Could PayPal’s recent announcement of beginning to offer crypto payments possibly force the mass adoption of crypto?
Cristina Dolan, Founder And CEO Of Insidechains And Vice Chair Of the MIT Enterprise Forum:
“This is a very exciting announcement that will help increase crypto adoption for traditional value transfer or payments by offering an easy and integrated solution for the 346 million active PayPal users.
The most challenging part of utilizing crypto for payments is the on-and-off ramp from the crypto blockchain networks using keypairs to make a payment or a transfer. Reducing that friction at the transaction point will make it easier to integrate it into simple value transfer use cases, therefore making it less intimidating.
This may even increase the velocity of crypto and Bitcoin spending across the network while increasing its perceived usability and value as a currency, not just a store of value. PayPal dominates payments processing, yet integrating crypto may also attract new customers.”
Dominik Schiener, Co-Founder Of The IOTA Foundation:
“Since there is no change to the merchant end of these transactions, right now the adoption would be on the user end. PayPal adding crypto as an option for users does speak to a future in which both ends of the transaction are engaged in crypto, which is very exciting for our adoption. This will eventually lead to mass adoption as well as a new method of payments between not just users and merchants but smart devices and smart cities.
As more payments platforms accept crypto, we will see that awareness grow into increased interconnectivity with IoT technology. Eventually, crypto will become a part of our daily lives as more companies use it for things like machine-to-machine payments, or our cars utilizing autonomous payments for tolls, charging and other services. Crypto transactions offer more options for touchless payments, in which our devices will handle the end-to-end transaction and we can keep our cards in our wallets.”
Jay Hao, CEO of OKEx:
“PayPal’s move into offering cryptocurrency services is extremely bullish for the space; however, it does not in itself signal instant mass adoption of them. What we are seeing, which is a very key sea change, is the normalization of cryptocurrencies like Bitcoin and their legitimization by institutions and large household companies.
Paypal will start offering these services to its U.S. customers, but with some 350 million customers around the world, this is a big step toward greater awareness and acceptance. Of course, it does not mean that everyone will rush out and buy Bitcoin, but as it gradually becomes more accepted, particularly against the backdrop of an economic crisis in which fiat currencies are losing their purchasing power, more entrants will naturally come to the market.
I think that many payments giants and tech companies like PayPal are also seeing the way that things are going and that they need to join it or get run over by it. I expect that the trend to come, and as we move into 2021, will be for more companies like PayPal, fintechs, hedge funds, brokers and banks to offer cryptocurrency services, whether that is the ability to purchase it or offering custodial services. All in all, the outlook is very promising, but we may have a while to wait until we can say that ‘mass adoption’ has been achieved.”
Jimmy Song, Instructor at Programming Blockchain:
“The only thing that ‘forces’ Bitcoin adoption is the collapse of fiat money, which isn’t happening yet. PayPal’s announcement gives people an additional path to buying Bitcoin to store value or buying altcoins to gamble — that’s it.”
Mati Greenspan, Founder of Quantum Economics:
“Yes. This move is likely a huge boon for the adoption of cryptocurrencies in real-world payments. Millions of people who prefer to pay with crypto are always looking for new vendors that accept them. PayPal is now effectively adding 22 million merchants to that list as well as opening the door for its over 300 million active customers.
The immediate effects might be diminished, depending on the level at which PayPal allows customers to transfer crypto in and out of its site. However, in the long run, users will come to understand the vast advantages of using digital assets and realize that they can now transfer value without the need of any third party. So, in a way, PayPal is sowing the seeds of its own destruction.”
Roger Ver, Executive Chairman Of Bitcoin.com:
“Of course, a platform with over 300 million active users helps push forward crypto mass adoption. Of the four cryptocurrencies PayPal added, it is the most bullish for Bitcoin Cash and Litecoin since those are the only two that are usable for on-chain payments at the moment.”
PayPal’s Crypto Trading Goes Live In The US
Customers will be able to trade up to $20,000 a week, rather than the originally announced $10,000.
On Thursday, PayPal’s crypto trading and payments went live for all eligible customers in the United States.
Per its updated announcement, PayPal ended its waitlist for customers looking to use cryptocurrency in the U.S. Trading features a limit of $20,000 per week, which is double the originally announced $10,000.
PayPal ultimately plans to make crypto payments available at 26 million merchants globally.
A representative told Cointelegraph that PayPal will notify U.S. customers about the general availability of crypto services in the coming days.
Dan Schulman, CEO of PayPal, noted that the shift to supporting crypto was driven by what he sees as an “inevitable” drift toward virtual currencies.
“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.”
Much-anticipated global services are expected to launch at the beginning of 2021, alongside crypto payments on Venmo. PayPal initially announced its plans to integrate crypto three weeks ago. The announcement led to a boost in BTC price.
As part of its crypto services, PayPal received the first conditional Bitlicense from the New York Department of Financial Services, one of the most hawkish sub-national financial regulators in the U.S. Many noted that the terms of PayPal’s crypto services would entail that coins bought on the platform would not be able to leave, likely as part of its compromise with regulators in bringing crypto services to such a wide user base.
PayPal CEO: Our platform will ‘Significantly Bolster The Utility Of Cryptocurrencies’
PayPal’s new crypto services will streamline business adoption of digital assets, says CEO Dan Schulman.
PayPal’s chief executive believes cryptocurrencies are on the verge of mainstream adoption as more businesses and consumers flock to “digital payments and digital forms of currency.”
In an interview with CNBC, PayPal CEO Dan Schulman said the COVID-19 pandemic has accelerated the shift to digital forms of payments. PayPal wants to be at the forefront of the ongoing digital transformation.
Schulman said the “use of cash has declined precipitously” amid the pandemic, adding that “40 to 70% of consumers no longer want to handle cash.”
PayPal is not just making it easier for people to buy and hold cryptocurrencies; the service will integrate with existing merchant payments platforms, allowing businesses to accept digital forms of payment.
The PayPal Executive said:
“One of the things that we allowed is not just making it easy to buy, sell and hold cryptocurrencies, but very importantly, early next year, we’re going to allow cryptocurrencies to be a funding source for any transaction happening on all 28 million of our merchants. And that will significantly bolster the utility of cryptocurrencies.”
PayPal consulted with global regulators and central banks before launching its crypto service. Schulman said it’s only a matter of time before these monetary authorities release their own central bank digital currencies, or CBDCs:
“It’s a matter of not if but when and how we’ll start to see more and more central banks issue forms of digital currencies. I think you’ll have more and more utility happen with cryptocurrency.”
PayPal launched its crypto trading services in the United States earlier this month, mere weeks after first announcing the new initiative. The services will be rolled out globally early next year.
The global payments merchant, which has over 300 million active users, has been buying up Bitcoin (BTC) and other cryptocurrencies at a rapid pace. As Cointelegraph recently reported, PayPal has bought nearly 70% of all the new Bitcoin in circulation. The supply shortage has been cited as a major reason for Bitcoin’s rapid appreciation over the past month.
Some of Bitcoin’s most ardent detractors claim that the digital currency lacks inherent value. To that, Schulman said:
“All forms of money are based on trust and set values that come from that trust.”
PayPal CEO Schulman Says He’s Bullish On Bitcoin As A Currency
PayPal (PYPL) CEO Dan Schulman said bitcoin’s usefulness as a currency will ultimately prevail over the buy-and-hold ethos, in an interview with CNBC Squawk Box on Monday.
* “I think that there’ll be more and more use cases for cryptocurrencies,” that make bitcoin more widely accepted, more stable and probably “more valuable” over time.
* PayPal will begin allowing users to transact with crypto as a funding instrument across 28 million businesses early next year.
* Schulman said central bank digital currency is a global inevitability. As that happens, “you’ll have more and more utility happen with cryptocurrencies,” he said.
* “Both may play important roles going forward,” he said.
* PayPal’s cryptocurrency purchasing services is scooping up an overwhelming number of newly minted bitcoins, according to Pantera.
* Bitcoin was trading hands around $18,480 at the time of his interview.
PayPal Suspends User For Crypto Trading Using Paypal’s Own Service
The user’s funds are reportedly under a 180-day hold.
A PayPal user reports their account has been restricted after they traded crypto too frequently using the platform.
According to U.S.-based Reddit user TheCoolDoc, PayPal sent them a message stating that it had permanently limited their account “due to potential risk.” The user said they had made at least 10 crypto transactions within a week, purchasing during dips and selling when the price was high, and PayPal had asked for an explanation for each transaction.
“The system flagged my account thinking I was selling items worth $10,000 in one week when I hadn’t done so in the last 6 years I’ve held a PayPal account,” the user said. “I submitted the stuff for review with my photo ID and wrote ‘PayPal Crypto’ for each crypto transaction because what else could I say?”
In a matter of hours, PayPal reportedly sent a message stating that the user would “not be able to conduct any further business” using the platform. The user stated that the remaining funds in the account — $462 — were placed on a 180-day hold, but they have since used other means to withdraw them.
The platform imposed a $10,000 limit — recently changed to $20,000 — for crypto purchases made within a week for U.S. customers, a limit the Reddit user denies exceeding.
“I genuinely 100% know I did nothing wrong and it’s a misunderstanding because they think I made 50+ buy/sell transactions in a span of 1 week of items, when it’s just crypto,” said TheCoolDoc.
PayPal announced on Nov. 12 that it would begin allowing eligible users in the United States to use cryptocurrencies for trading and payments. Reddit user Cryptix001 also reported problems with the platform handling crypto transactions:
“I told them I was using PayPal to transfer money from one of my online accounts to my main checking account (Coinbase to checking) to bypass the longer withdrawal time. I had never had an issue doing this until it was a larger sum of money that I needed to pay some bills. It took them a nerve-wracking week before they finally agreed to release my funds. I’ll never use PayPal again.”
The platform’s policy states that it charges no transaction fees for users buying or selling crypto until 2021, and there are no fees for holding crypto. Reddit user bittabet suggested a partial explanation for PayPal’s actions could be that it loses money with users conducting high-volume trades.
“PayPal isn’t a crypto exchange, their service is meant for people to hold Bitcoin with and then spend it at their merchants when they turn on that ability,” the Reddit user stated. “If you go and trade constantly they lose a ton of money covering those fees since they’re not charging any fees right now. Their service is supposed to be more like a Bitcoin bank account, not a trading account.”
Even if the platform removed the restrictions from their account, TheCoolDoc said they would “never buy a Satoshi of crypto” from PayPal again.
Almost 20% of PayPal Users Have Used App To Trade Bitcoin, Mizuho Says
Nearly one-fifth of PayPal (PYPL) users have already traded bitcoin using the PayPal app, according to a report published Tuesday by Mizuho Securities and obtained by CoinDesk.
* Per the Mizuho survey, about 65% would use bitcoin as a currency at PayPal’s 28 million merchants; 17% of users have already used the app to buy and sell bitcoin.
* Bitcoin exuberance boosts user engagement, the survey found, with bitcoin traders reporting more than three times higher usage frequency compared with non-bitcoin traders. They also held larger cash balances, the survey found.
* “About 50% of PayPal bitcoin traders reported increased usage of the PayPal app after beginning to trade bitcoin,” the survey found. “This compares with just 9% who reported reduced engagement.”
* The survey comes over a month after PayPal announced its plans to support bitcoin and other cryptocurrencies, as CoinDesk reported at the time, and only a few weeks after the payments firm removed the waitlist to access the service, citing overwhelming demand.
* But converting non-bitcoin traders into cryptocurrency users is a challenge for PayPal, the survey found. Only 8% of non-bitcoin traders said they would plan to trade the leading cryptocurrency in the future on PayPal’s app while 42% said they “don’t know yet,” according to Mizuho.
* Citing the results of the survey, the firm raised its stock trading target on PayPal to $290 per share, up from the prior target of $270. In recent trading, shares of PayPal were up about 2.37% to $219.20. Mizuho maintained its “buy” rating on the payments giant.
PayPal CEO Calls On Crypto Industry To Work Hand In Hand With Regulators
Compliance is key if you want to play the game, says PayPal CEO Dan Schulman.
There is no other way for the cryptocurrency industry to thrive without working hand in hand with regulators, PayPal CEO Dan Schulman believes.
On Wednesday, Schulman joined the Web Summit online conference to discuss the cashless era of the global financial industry with Squawk Box host Andrew Ross Sorkin.
As part of the discussion, Schulman addressed issues related to cryptocurrency regulation, calling on the industry to closely collaborate with financial authorities to bring more utility to crypto. “There is only one way to approach this, and that is working hand in hand with regulators,” he argued.
Schulman Went On To Say That Regulatory Compliance Is Foundational For Providing Services In The Crypto Industry:
“Part of that foundational capabilities are regulatory compliance, full understanding of security, risk management, all of the financial controls, FinCEN controls, AML controls. Without that, you really have no way that you should be in this arena. […] You must have those.”
Schulman said that the company invested a “tremendous amount” in regulatory compliance, noting that PayPal became the first firm to get a conditional BitLicense from regulators in New York. “We’re doing this hand in hand with regulators, and it’s the only way to go about doing this,” Schulman argued.
“Strong regulatory oversight is extraordinarily important, and I’ve got zero issue with that,” the executive said. Schulman stated that PayPal has strong relationships with regulators because it aims to prevent illicit practices like money laundering while providing some degree of financial health.
In October, PayPal officially broke the news on the company’s plans to introduce the ability to buy, hold and sell a number of cryptos including Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) directly with the PayPal digital wallet.
PayPal subsequently rolled out its crypto service in the United States, allowing clients to trade up to $20,000 per week.
Schulman has previously claimed that PayPal’s crypto services will eventually increase the utility of cryptocurrencies.
Evercore Says PayPal’s Crypto Offering Could Bring Big Business/Stock Price Boost
Advisory company Evercore has named PayPal (PYPL) as its top payments stock and said the firm’s recently launched cryptocurrency offering could be good for profitability.
* According to a Bloomberg report Monday, Evercore ISI research analyst David Togut said PayPal’s move into cryptocurrency could “substantially increase both customer engagement and transaction margin.”
* The introduction of QR codes, too, is helping PayPal achieve its goal of offering services across multiple payments channels, Togut said.
* As e-commerce continues to grow, PayPal has assumed a “superior market position as a digital and mobile merchant acquirer with a strong mobile wallet” and various payment services, he wrote.
* PayPal confirmed its plans to launch crypto buying and selling, as well as crypto merchant payments, in an Oct. 21 announcement that sent shockwaves across the industry.
* Soon after it launched – earlier than planned – for U.S. users, allowing them to buy, hold and sell bitcoin, ether, bitcoin cash and litecoin.
PayPal Stock Has Surged 17% Since Enabling Bitcoin Purchases
The online payment platform launched crypto trading for U.S. customers on Nov. 12.
PayPal’s stock reached record highs on Monday, capping off a strong period of outperformance relative to the Nasdaq and broader U.S. stock market.
Since Nov. 12, the technology-focused Nasdaq has gained around 6.5%. The broad S&P 500 Index of large-cap stocks is up 3.5% over the same period.
Although PayPal’s foray into crypto isn’t the only catalyst behind its vast outperformance, the merchant processor is well-positioned to capitalize on the growing adoption of digital assets. Some analysts have even speculated that a higher Bitcoin (BTC) price could have a positive effect on PayPal’s prospects.
There’s also evidence that the payment processor may be positively influencing Bitcoin’s price. Recent industry data suggests PayPal may have scooped up as much as 70% of the newly mined BTC in the weeks leading up to its crypto platform going live in the U.S.
Although estimates vary, a 2019 survey of 5,000 people claimed that 6.2% of Americans above the age of 18 own Bitcoin. The survey said an additional 7.3% are planning to purchase BTC for the first time.
If these numbers are to be believed, cryptocurrencies could have a positive impact on PayPal’s business as more people gravitate to easy onramps. Case in point: Square’s Cash App has seen its revenue surge since enabling Bitcoin purchases. In fact, nearly 80% of Cash App’s third-quarter revenue was derived from fees charged on Bitcoin buyers.
Shares of PayPal Holdings (PYPL) have gained a whopping 17% since Nov. 12, the day the online merchant launched its crypto trading platform for eligible U.S. customers.
PayPal plans to launch its global crypto services in early 2021. CEO Dan Shulman asserted that it’s only a matter of time before his company starts supporting central bank digital currencies, or CBDCs, as they become available.
PayPal Crypto Partner Paxos Closes $142M Funding Round
The stablecoin issuer is pursuing ambitious plans in the expanding crypto space.
United States-bases stablecoin operator Paxos has raised $142 million in fresh funding from investors including PayPal and Mithril Capital. The stablecoin issuer announced the news on Thursday.
U.S. investment firm Declaration Partners, backed by billionaire David M. Rubenstein, led the funding round with other participants including RIT Capital Partners plc., Ken Moelis, Alua Capital, and Senator Investment Group. Previous Paxos backers like RFE Ventures and Liberty City Ventures also invested in the funding round.
With the close of the $142 million Series C round, Paxos has now raised over $240 million from investors and backers. Commenting on the development, Paxos CEO Charles Cascarilla remarked that the funds will help the company in achieving its ongoing plans in the crypto space, adding:
“Our Series C funding will help us continue building financial market infrastructure of the future and accelerate our growth. We want to double the size of our team, expand our current product solutions and build new products that enterprises need. We’ll do this all while remaining 100% committed to regulation, reliability and security.”
As previously reported by Cointelegraph, Paxos is working towards securing a trust bank charter. In a conversation with a Cointelegraph, a spokesperson for the company revealed that its plan to become a Federally-chartered bank is part of efforts tailored towards building infrastructure for the largest enterprises and financial institutions in the world.
The banking charter application news followed on the heels of the Paxos partnership with U.S. payments giant PayPal. Paxos provides crypto trading and custody service as part of PayPal’s plans to allow users to utilize cryptocurrencies as a funding means for online payments come 2021.
Before the PayPal integration, Paxos was known for its PAX stablecoin and related white label solution, which powers currencies like Binance USD.
Mizuho Analyst: Bitcoin Will Make PayPal ‘Center of People’s Financial Lives’
PayPal’s (PYPL) foray into bitcoin could become a “game changer” for both the payments company and its users, said Mizuho Securities analyst Dan Dolev in an interview with CNBC on Friday.
* During the “Fast Money” interview, the analyst said the investment bank had surveyed almost 400 PayPal users and found nearly 20% had started using PayPal’s new bitcoin (BTC, -1.53%) buying and selling service. Of those, half had indicated increased engagement with the firm’s services.
* Mizuho sees bitcoin not as a source of revenue itself, “but as a vehicle to boost engagement on the app,” and that could drive revenue growth, he said.
* Further, as people start to use PayPal services more “it’s going to make PayPal more the center of their financial life,” according to Dolev.
* The same applies to Square (SQ), the Jack Dorsey-led payments firm that offers bitcoin buying and selling through its Cash App, he added.
* Dolev predicted that in 2021 there will be an “inflection point” as more and more people start using these apps, and the “trigger is bitcoin.”
* PayPal announced it would allow crypto buying and selling as well as crypto merchant payments on Oct. 21 and soon after launched the service early for U.S. users.
Paypal Also Plans To Start Rolling Out Crypto Trading To Their 60 Million Venmo Users In The First Half of 2021.
Paypal To Earn $2 Billion In Revenue From Its Bitcoin Business, Says Analyst
Mizuho Securities analyst Don Dolev has forecast that Paypal will earn up to $2 billion in revenue from its bitcoin business by 2023. This year, he expects that the payment giant’s overall revenue will climb 20%.
Dolev says there has been a “dramatic increase in engagement due to crypto,” with 50% of Paypal crypto users opening the app daily. “Both our survey and management commentary unveil a dramatic increase in engagement due to crypto,” said Dolev in a note to clients this week.
Paypal announced in October that its 346 million active users will now be able to buy, hold and sell bitcoin and other digital assets using their Paypal accounts. The company’s crypto service, which runs on Paxos’ fiat-to-crypto exchange, Itbit, has seen an explosion of interest ever since.
At one time, Paypal was buying 70% of all newly minted bitcoin. Dolev’s survey found that bitcoin (BTC) traders use the Paypal app three times as much as non-bitcoiners and that they had significantly higher cash balances on their Paypal digital wallets.
Dolev raised his target price for the Paypal stock to $350 from $290. The stock closed 0.94% down at $239.79 on the Nasdaq Stock Exchange on Friday. Over the past 52 weeks, the shares have reached a high of $249.85 and a low of $82.07.
In a related development, Lisa Ellis, analyst at Moffett Nathanson, predicted that Paypal’s crypto business will contribute up to $600 million to group revenue in 2021. “Over the long-term, we believe Paypal’s cryptocurrency initiatives have significant strategic value,” she was quoted as saying by Market Watch.
Ellis added that this will help “diversify the Paypal and Venmo apps into ‘destination apps’ for a broad range of financial services, and positioning Paypal to help shape the long-term role of cryptocurrencies in the consumer payment system.”
PayPal To Offer Crypto Payments For Merchants, Limited Trading On Venmo
After their limited crypto trading service “exceeded expectations,” the company will double down on crypto, blockchain, and digital currencies in 2021.
After a limited buy/sell/hold crypto trading launch that “exceeded expectations,” PayPal CEO Dan Schulman said on the company’s Q4 earnings call today that the payments giant is ready to double down on cryptocurrencies.
“We also saw an exceptional response from our crypto launch,” said PayPal CEO Dan Schulman. “[…] The volume of crypto traded on our platform greatly exceeded our expectations.”
Schulman said that crypto would be accepted “as a funding source when [users] shop at any of our 29 million merchants” late first quarter, and that 2021 will feature an “extensive roadmap around crypto, blockchain and digital currencies.”
Schulman added that PayPal is actively working with regulators and central banks “to shape the future of” a post-physical cash world.
“We are significantly investing in our new crypto, blockchain, and digital currencies unit,” he said.
Analysts expected a 3.87% increase in total accounts to 375 million, as well as $266.8 billion in total payments processed, a 8% increase over Q3; the company beat both expectations with $277 billion processed and 377 million in total accounts. The company also reported $21.45 billion in revenue.
The company’s Q4 investor update materials likewise promised “digital currencies” as a “key focus area.”
Additionally, the company said that their “Buy, Hold, and Sell Cryptocurrencies” initiative would expand to “Venmo and select international markets” in 2021. The company also noted that users of their crypto services become more active users of PayPal generally after purchasing crypto, logging in twice as often.
Finally, PayPal’s materials echoed Schulman’s statements, saying that a “commerce experience” would launch in 2021 which would provide “cryptocurrency as a funding source to pay at PayPal’s 29 million merchants around the globe.” These integrations would be settled in fiat, and would relieve merchants of conversion fees.
In November, PayPal took a major step towards adoption of digital assets by allowing its U.S. users to purchase crypto directly through the app. Customers based in the United States are limited to trading $20,000 per week. Since that time, crypto trading volume on the platform has reached record highs, peaking at $242 million in transactions on Jan. 11.
The platform also announced plans for customers to use cryptocurrencies to shop at any of the 26 million merchants in its network starting in 2021, a goal reaffirmed during the firm’s Q3 2020 earnings call. At that time, PayPal execs indicated central bank digital currencies were “a matter of when and how they’re done, and not if.”
PayPal Expanding Crypto Services To U.K. Residents
CEO Dan Schulman said last week the company would add crypto buying, selling, and custody features to “Venmo and select international markets” in 2021.
Residents of the United Kingdom will be the first people outside of the U.S. who are able to use PayPal for buying and selling crypto.
According to journalist Carl Quintanilla, the payments platform is planning to expand its crypto offerings to the U.K. in the coming months. PayPal also plans to make crypto available for Venmo wallet holders before the end of Q2 2021. Other non-crypto services include expanding Venmo internationally before 2026 and a broader rollout of the app’s credit cards.
— Carl Quintanilla (@carlquintanilla) February 11, 2021
PayPal CEO Dan Schulman mentioned that the company would add crypto buying, selling, and custody features to “Venmo and select international markets” in 2021 during last week’s Q4 earnings call. However, it was unclear which market would be first for the rollout. Schulman said that the firm was “significantly investing” in its crypto, blockchain, and digital currencies arm after the launch of crypto services “exceeded expectations.”
U.S. users have been able to purchase crypto directly through the PayPal app since November, when the company took a major step towards adoption of digital assets. Since that time, crypto trading volume on the platform has reached record highs, peaking at $242 million in transactions on Jan. 11.
The platform’s customers will also soon be able to use cryptocurrencies to shop at any of the 29 million merchants in its network before Q2 2021, according to Shulman in the most recent earnings call. The CEO said at the time that PayPal is actively working with regulators and central banks “to shape the future” of a post-physical cash world.
PayPal Confirms It’s Buying Crypto Security Firm Curv
The payments giant said Curv will help it “accelerate and expand its initiatives to support cryptocurrencies and digital assets.”
PayPal said Monday it has agreed to acquire Israel-based Curv, a provider of cloud-based infrastructure for digital asset security.
The financial terms of the deal were not disclosed, but the payments giant said it plans to use its new purchase to “accelerate and expand its initiatives to support cryptocurrencies and digital assets.”
CoinDesk first reported the acquisition was in progress on March 2.
“The acquisition of Curv is part of our effort to invest in the talent and technology to realize our vision for a more inclusive financial system,” said Jose Fernandez da Ponte, PayPal’s vice president and general manager of blockchain, crypto and digital currencies.
“During our conversations with Curv’s team, we’ve been impressed by their technical talent, entrepreneurial spirit and the thinking behind the technology they’ve built in the last few years. We’re excited to welcome the Curv team to PayPal,” he said.
Curv co-founder and CEO Itay Malinger said, “Now, as the adoption of digital assets accelerates, we feel there’s no better home than PayPal to continue our journey of innovation.”
PayPal said it expects the acquisition deal to be completed in the first half of this year.
PayPal’s Crypto Push
PayPal, which partnered with New York state-regulated Paxos to offer buying and selling of cryptocurrency starting in October, was known to be on the hunt for a crypto custody acquisition. The payments giant was reported to have been in talks to buy BitGo for as much as $750 million, though the deal fell through.
Multi-party computation (MPC) shops like Curv and Fireblocks are in short supply in cryptoland – the latter is reportedly working on crypto custody with BNY Mellon.
For instance, Curv previously rebuffed an offer to be acquired by Facebook’s crypto arm, Novi, according to a source with knowledge of that deal.
Curv is partnered with some notable crypto firms focused on Europe such as eToro and FalconX, suggesting PayPal is serious about spreading its crypto footprint outside the U.S., as well as offering a broader range of services.
As big banks look to partner up or “acqui-hire” on the custody front, the year ahead could see more crypto M&A from institutional players.
PayPal’s Entry To Crypto Followed Long Buildup In Expertise
Last year’s launch of crypto market was the culmination of finding the right talent and working with Paxos Trust, a regulatory technology provider, the CTO of PayPal’s blockchain unit says.
PayPal Holdings Inc. became one of the largest companies in the U.S. to enter the market for digital currencies with its announcement last October that it would allow its millions of U.S. users to sell, buy and hold cryptocurrencies.
Over the past few weeks, several other companies have announced their plans for cryptocurrencies, ranging from Tesla Inc. to Mastercard Inc. and Bank of New York Mellon Corp.
The recent stir is likely just the beginning of digital currencies inching closer into the mainstream, experts say.
“The demand is there,” said Oliver Bussmann, chief executive of Bussmann Advisory, which advises financial institutions on digital strategies, and a former group chief information officer at UBS AG and SAP SE. Information technology leaders should start building expert teams, he said, and educate other executives on how it could affect their businesses.
PayPal, with 377 million users globally, is a 22-year-old online payments company that allows individuals and merchants to securely send and receive money.
For PayPal, last year’s launch of its cryptocurrency market was the culmination of putting in place the right talent, working with a trusted regulatory technology provider and having existing executive-level support, said Edwin Aoki, chief technology officer for PayPal Blockchain, Crypto and Digital Currencies.
At some point this year, the company said it expects to allow users to tap their cryptocurrency balances for payments at millions of merchants that use PayPal.
Last October, PayPal became the first company to receive a conditional “Bitlicense” from the New York State Department of Financial Services.
In 2016, PayPal Chief Executive Dan Schulman added cryptocurrency entrepreneur Wences Casares to PayPal’s board of directors and the two began discussing the potential for digital currencies to give more people access to the financial system.
By late 2017, PayPal had a dedicated research group exploring blockchain, the record-keeping system behind cryptocurrencies, Mr. Aoki said.
Blockchain is still an early-stage technology, and there aren’t many experts with several years of experience in the technology under their belt, Mr. Aoki said. Blockchain made Microsoft Corp.’s LinkedIn list of the top in-demand “hard skills” for the first time last year.
It was important, Mr. Aoki said, that new blockchain technology hires were able to share their expertise with other PayPal technologists.
The early blockchain team focused on “fundamental research” related to blockchain technology and wasn’t specifically focused on exploring how PayPal could eventually use it and build it into a product, Mr. Aoki said.
Last year was a turning point. “We saw the pandemic had really accelerated the pace of digital adoption [and] we felt the time was right” to turn the company’s research on blockchain into a product, Mr. Aoki said.
The product development process involved combining existing blockchain and cryptocurrency talent with new hires. Mr. Aoki wanted to make sure he brought in new talent who could easily explain what it would mean to buy, sell and hold cryptocurrencies to its existing and new PayPal customers, via its website and mobile application.
When users go on PayPal’s “Crypto” webpage, they can choose to buy bitcoin, ethereum, bitcoin cash and litecoin, and they can also learn more about cryptocurrencies.
PayPal’s venture capital arm has also made investments in blockchain and cryptocurrency-related startups such as Cambridge Blockchain Inc. and TaxBit over the past two years.
Companies such as Coinbase and Robinhood Markets Inc. also offer the ability to buy and sell cryptocurrencies.
PayPal uses Paxos Trust Co. LLC to power the back-end infrastructure that allows its users to buy, hold and sell cryptocurrencies in a way that complies with data privacy rules and financial regulations.
Paxos has spent seven years acquiring the necessary regulatory approvals from federal and state agencies as well as international governments to hold and move people’s cryptocurrency assets and it is still working on more approvals, said Charles Cascarilla, chief executive and co-founder.
“We’ve built scale, tools and specialized knowledge that it would take a long time to accumulate even for somebody like PayPal,” Mr. Cascarilla said.
Founded in 2012, New York-based Paxos has about 150 employees and is backed by $240 million in investor funding to date. It uses cloud services from Amazon.com Inc.’s Amazon Web Services to host the underlying software that enables the buying and selling of cryptocurrencies for clients like PayPal. The software allows digital assets to be held and moved on the blockchain protocols underlying bitcoin and other cryptocurrencies.
PayPal and Paxos exchange information through application-programming interfaces, or APIs, pieces of software that enable apps, platforms and systems to connect with each other and share data.
Digital currencies have gained more traction among bigger, well-known companies and individuals over the last year in part because the pandemic has increased people’s familiarity with technology of all kinds, Mr. Cascarilla said. People are also becoming more interested in new ways to protect their money and be part of the financial system, he said.
“The adoption curve is only just getting started,” he said.
PayPal Launches Crypto Payments At 29M Merchants
The latest adoption step for Bitcoin and some altcoins will receive official confirmation on Tuesday, PayPal tells Reuters.
Bitcoin (BTC) neared $60,000 on March 30 after PayPal confirmed that it had formally launched cryptocurrency payments.
PayPal: Crypto is now “legitimate funding source”
Data from Cointelegraph Markets Pro and Tradingview showed BTC/USD hitting a ten-day high on Tuesday as details appeared in the mainstream press.
According an exclusive report from Reuters, PayPal is set to release a formal announcement later on the day in which it will unveil its long-awaited cryptocurrency payment feature for U.S. customers.
The company caused a stir last year when it confirmed its venture into crypto, with the rollout ultimately set to extend to all users and 29 million merchants.
“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” President and CEO Dan Schulman told Reuters.
While PayPal will not focus solely on Bitcoin, BTC price action reacted favorably to the reports, passing February’s prior all-time high of $58,300 to manage $59,200 at the time of writing.
A look at orderbook data from Binance showed sellers still lined up between current spot price and historic highs of $61,700.
Continuing, PayPal referenced a watershed moment for cryptocurrencies in general, with Schulman describing them as a “legitimate funding source.”
“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” he added.
Woo: Bitcoin Heading To “Millions Of Dollars”
Long a skeptic, PayPal’s official line now chimes with some of Bitcoin’s most forward proponents. Among the most bullish long-term forecasts this week was that from statistician Willy Woo, who in an interview said that a single Bitcoin would ultimately become worth “millions of dollars.”
“There’s no way that Bitcoin’s going to stop at the market cap of gold, which is $10 trillion; it’s going to go a lot higher, which means that we’re going to be going into the millions of dollars per coin,” he told Real Vision’s Laura Shin.
Also featuring was veteran trader Peter Brandt, who in a now widely-circulated comment said that he had completely changed his perspective on Bitcoin.
“My mindset has changed… from bitcoin as a trade to bitcoin as a measure of wealth,” he said.
PayPal Will Let You Use Bitcoin. But Why Would You?
If you think the price is going to the moon, what’s the benefit of exchanging it for ostrich boots?
Are Bitcoin and other cryptocurrencies truly currency?
I’m hardly the first person to ask this question, but it looks increasingly likely that the world will get answers soon. PayPal Holdings Inc. on Tuesday announced a new service called “Checkout with Crypto,” which promises to allow customers to select either Bitcoin, Litecoin, Ethereum or Bitcoin Cash as a payment method to buy goods from millions of merchants worldwide.
Once the purchase is confirmed, PayPal will convert the cryptocurrency to fiat on behalf of the customer, who will receive both a receipt and a record of the crypto sale.
Chief Executive Officer Dan Schulman demonstrated the service in a video that showed him buying ostrich cowboy boots. The company says the new feature “expands the utility of cryptocurrency” and follows Elon Musk’s announcement that Tesla Inc. will accept Bitcoin for cars.
This strikes at the heart of a key question surrounding Bitcoin: Can it serve both as store of value and a medium of exchange?
Or, put in a way that doesn’t sound like an economics textbook: Can a cryptocurrency that has appreciated by more than 700% over the past year, in no small part because of true believers who preach the virtues of HODLing (read: holding) because they’re convinced it’s the future of payments and the price will go higher, suddenly transform into a stable way to transact?
It’s not clear who among the crypto crowd has been champing at the bit to offload some of their Bitcoin through PayPal to buy stuff that they could otherwise get with dollars, euros or yen. For one thing, it’s not as if there are any tax savings: PayPal notes in its lengthy terms and conditions that “sales of Crypto Assets via Checkout with Crypto are taxable just like all other sales of Crypto Assets.”
This type of transaction is also different from Visa Inc.’s announcement earlier this week that its payments network will use a stablecoin backed by the U.S. dollar to settle transactions, which is more of a vote of confidence in blockchain technology.
It’s hard to see choosing to use Bitcoin, rather than fiat currency, to buy goods as anything other than a tacit acknowledgment that the top is close at hand — blasphemy, in other words.
Consider the view of Laszlo Hanyecz, who went through with the first known commercial transaction of cryptocurrency in 2010 when he paid 10,000 Bitcoins (almost $600 million at today’s price) for two pizzas.
He told Bloomberg News’s Olga Kharif in February that he’s not too interested in Tesla because “if you give it five years, I think the Bitcoin you’d spend will be more valuable than the car.” Or as Eleesa Dadiani, a London-based entrepreneur and crypto broker, put it to Bloomberg’s Charlie Wells: “Buy Tesla in the money that’s soon going to be extinct.”
CEO Says Paypal’s Crypto Commerce May Reach $200M Volume In Just Months
Forbes’ “2021 Blockchain 50 Symposium: Crypto Goes Corporate” event sheds light on the future of Bitcoin for large corporations.
As the price of Bitcoin continues to reach new all-time highs, major corporations with existing crypto offerings in place are beginning to discuss grand plans for the future.
Most recently, Dan Schulman, CEO of PayPal, hinted at future developments for PayPal’s crypto offering during Forbes’ “2021 Blockchain 50 Symposium: Crypto Goes Corporate,” an online event that took place on April 13.
During a fireside chat with Michael del Castillo, associate editor at Forbes, Schulman mentioned that the financial system will undergo more changes over the next five years compared to the progress that has been made in the previous 30 years.
Schulman further noted that digital currencies, like Bitcoin (BTC), will lead the way, mentioning that there will be far less cash and credit card transactions in the next five to 10 years. Schulman said:
“We are moving into the era of digital currencies, and those digital currencies hold tremendous promise, whether these are cryptocurrencies or central bank digital currencies. I believe digital currencies can increase the utility of payments and make the financial system more inclusive and less expensive.”
Digital Currencies Will Create Financial Inclusion
According to Schulman, one of the biggest challenges facing society today is the fact that millions of people everywhere are being excluded from today’s financial system.
This has become especially apparent in the United States, as Americans with bank accounts have started receiving their latest round of economic stimulus checks via direct deposit. Unfortunately, millions of unbanked and underbanked Americans must wait much longer to receive paper checks in the mail.
Schulman noted that today’s financial system is relatively inefficient, mentioning that it takes too long to receive money, which is even more challenging for lower-income individuals. “It’s not inclusive at all,” he said.
In order to solve these ongoing issues, Schulman explained that PayPal’s crypto offering, which went live in the United States in November 2021, will eventually allow users to do more than just buy, sell and hold Bitcoin, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
While PayPal revealed at the end of March that the platform would soon allow its merchants to accept cryptocurrency as a medium of exchange, Schulman hinted that this is just the beginning of many possibilities:
“PayPal really wants to use cryptocurrency as a funding source for everyday transactions. The endgame, though, is a more noble vision of this inclusive economy, and things will be done much differently than today.”
In addition to crypto payments, Schulman shared that PayPal will eventually leverage smart contracts and other underlying technologies to ensure that a payment is more than just a transaction. “This is the promise of all digital currencies — they can create incremental value from just a basic transaction.”
Digital Currency Innovation Could Take Longer Than Expected
While PayPal’s crypto plans are notable, it’s important to point out that innovation may take longer than expected. For instance, when del Castillo asked Schulman about how long he expects PayPal’s crypto service to reach $200 million in volume, Schulman boldly answered that it would take only a matter of months, or maybe less.
Although this is encouraging for crypto adoption, del Castillo noted that it took Coinbase Commerce, a platform that supports cryptocurrency payments for online retailers, 13 months to generate $200 million in volume.
However, Cointelegraph previously reported that the success of Coinbase Commerce was partly due to the 8,000 retailers currently using Coinbase for payment services. Schulman mentioned during the fireside chat that PayPal has over 375 million consumers of digital wallets and about 30 million merchants on the platform. In turn, PayPal may very well break new boundaries when it comes to digital payments for commerce.
No Plans To Add Bitcoin To Paypal’s Balance Sheet
Although Schulman appears to have a highly optimistic attitude toward cryptocurrency adoption, the executive shared that there are still no plans to add Bitcoin to PayPal’s balance sheet in 2021. “I think the probability of this is low,” he said.
When asked why, Schulman explained that PayPal’s balance sheet consists of safe assets with less volatility since funds need to be used in ways that may return money to shareholders. “We really need to be sure of what’s on that balance sheet to ensure consistent capital allocation,” Schulman said.
While this may be, Michael Saylor, chairman and CEO of MicroStrategy, has a different belief regarding Bitcoin’s volatility. This shouldn’t come as a surprise, though, as the business intelligence firm recently announced that its board of directors would receive bonuses in Bitcoin instead of fiat.
Saylor also shared his thoughts on the future of Bitcoin during Forbes’ “2021 Blockchain 50 Symposium: Crypto Goes Corporate” event. During a fireside chat with Steve Ehrlich, digital assets research director at Forbes, Saylor commented that there has been “a huge change across the sentiment in the corporate world” toward Bitcoin.
However, he noted that thousands of companies are still hesitant to add Bitcoin to their balance sheet for two reasons: volatility and intangible accounting.
According to Saylor, volatility is a misnomer, noting that Bitcoin has been the most successful asset of the decade because it has been doubling in price every six months for 10 years straight. Saylor commented:
“The winning team of everything on earth is always the most volatile. Anyone who thinks volatility is bad must be betting on losers.”
Saylor further explained that the only logical reason why most companies still haven’t added Bitcoin to their balance sheet is due to intangible accounting methods, noting this is more problematic than volatility. Although this may be the case for many companies, Saylor remarked that MicroStrategy’s balance sheet will be 99% invested in Bitcoin. He said:
“Our strategy is to develop, acquire and hold Bitcoin. Crypto and Bitcoin are gaining acceptance and adoption. If you look at March 2020 versus where we are today, you can see it’s an extraordinary developing asset class. I also think the Coinbase direct listing will be a massive coming out party for the crypto economy.”
PayPal-owned Venmo Allows Customers To Buy, Sell And Trade Crypto-Currencies
Venmo is following in the footsteps of its rival, Square’s Cash App, by introducing cryptocurrency trading.
Payments app Square made headlines — and dollars — when it integrated Bitcoin trading into its mobile platform back during the crypto bull market of winter 2017.
Now, rival payments firm Venmo, owned by PayPal, is following suit by launching cryptocurrency trading for four major coins: Bitcoin (BTC), Ether (ETH), Litceoin (LTC) and Bitcoin Cash (BCH).
Beginning on Tuesday and set to be widely available within the new few weeks, Venmo’s 70 million+ customers will be able to buy, hold and sell crypto directly within the Venmo app. The launch is offering users access to in-app guides to help them to better navigate the cryptocurrency trading space and will encourage them to share their cryptocurrency experiences via the Venmo feed.
Venmo users will be able to buy as little as $1 worth of cryptocurrency and can use either funds from their Venmo balance or from a linked bank account or debit card to buy and sell their holdings.
Over 30% of Venmo customers have already begun to purchase cryptocurrency or equities, according to the company’s research into 2020 customer behavior. Of these, 20% began their purchase during the COVID-19 pandemic, suggesting that the public health and concurrent economic crisis has accelerated trends in digitization and experimentation with new financial technologies.
Support for cryptocurrency on Venmo is facilitated through a partnership with Paxos Trust Company, a regulated provider of crypto products such as its stablecoin and other services. Venmo owner PayPal is also the holder of a conditional Bitlicense from the exacting New York State Department of Financial Services.
Conditional licensees, such as PayPal, are required to pair off with firms that have already been granted full-blown licenses — as, in this case, has Paxos.
Just under a week ago, PayPal CEO Dan Schulman hinted at developments underway since the payments giant first went live with its crypto offering in the United States in November of last year. Schulman said that PayPal aims to support the use of crypto for everyday transactions and to tap into smart contracts and other, more expansive features of blockchain technology.
He also pitched the company’s vision of leveraging crypto for the attainment of a more “inclusive economy,” in which “things will be done much differently than today.”
Demand For Paypal’s Crypto Offering Exceeded All Expectations, CEO Says
In the next five to 10 years, there will be more changes in the financial system than over the past two decades, PayPal’s CEO predicted.
The demand for cryptocurrency exceeded PayPal’s initial expectations after the firm launched crypto trading in late 2020, according to the company’s CEO.
“Demand on the crypto side has been multiple-fold to what we initially expected. There’s a lot of excitement,” PayPal president and CEO Dan Schulman said in a Sunday interview with Time magazine.
Schulman said that existing financial infrastructure needs modernization because it’s “inefficient today” due to overly expensive, slow international transactions. The CEO predicted that the financial system is poised to see more changes in the next five to 10 years than it has experienced over the past two decades.
“Ten years from now, you will see a tremendous decline in the use of cash. All form factors of payment will collapse into the mobile phone. Credit cards as a form factor will go away, and you will use your phone because a phone can add much more value than just tapping your credit card,” he said.
Schulman said that central banks will have to rethink their monetary policies as people stop using paper money. The executive said that central bank digital currencies could benefit from emerging technologies like distributed ledger technology. “But they’re basically digitizing a fiat currency like the U.S. dollar,” Schulman noted.
PayPal announced its plans to introduce the ability to buy, hold and sell a number of cryptocurrencies including Bitcoin (BTC) and Ether (ETH) in October 2020. By the time the new feature went live in the United States in mid-November 2020, Bitcoin was trading at around $16,000. The world’s largest cryptocurrency subsequently saw a massive rally, driving its price to a new historic record above $64,000 in April.
Amid growing prices and demand for crypto, PayPal has continued to expand its crypto services to clients, launching its crypto check-out service in late March to allow crypto payments for merchants. Last week, PayPal-owned payments platform Venmo introduced crypto trading for four major coins including BTC, ETH, Litecoin (LTC) and Bitcoin Cash (BCH).
PayPal Wants More Customers To Pay Using Crypto Assets
But the company doesn’t plan to invest its corporate cash into these assets yet, the CFO says.
PayPal Holdings Inc. is looking to expand its lucrative business of enabling customers to pay merchants with crypto assets, but the digital payments company doesn’t yet plan to invest in these assets, Chief Financial Officer John Rainey said.
“It is still a highly volatile asset right now,” Mr. Rainey said, referring in general to fluctuations in price of cryptocurrency assets. “But if in a couple of years, there is more stability, I would never say no,” he said. Mr. Rainey declined to comment on what he would define as more stability.
The value of crypto assets such as bitcoin, ether and dogecoin have risen in recent weeks on the back of strong market sentiment and the rise of nonfungible tokens, among other factors. Some companies, including Tesla Inc. and Square Inc., earlier this year disclosed corporate investments in cryptocurrencies.
However, most CFOs have been cautious so far, pointing to the risks associated with spending corporate cash on bitcoin and other crypto assets. “We are managing our cash very consistently,” PayPal’s Mr. Rainey said. The company held $19.1 billion in cash, cash equivalents and investments at the end of its latest quarter.
San Jose, Calif.-based PayPal in November introduced a feature enabling most U.S. customers to buy, sell and hold bitcoin, ether, litecoin and Bitcoin Cash. Earlier this year, it launched an option for people to use their holdings in these currencies to pay merchants.
Those transactions are more attractive for PayPal than those involving a credit or debit card, as there are no card issuers or network providers that need to be paid. The payments company still charges its merchants a standard transaction fee of around 2.9%, but gets to keep more of that money, Mr. Rainey said. “It’s a high margin transaction for us,” he said.
PayPal has to pay Paxos Trust Co., a company that converts the crypto assets into U.S. dollars before they are sent to the merchant. The execution risk lies with Paxos, Mr. Rainey said.
PayPal on Wednesday reported revenue of $6.03 billion for its latest quarter, up 29% compared with the prior-year period. Total payment volume rose 46% to $285.45 billion. The company is now expecting payment volume to grow by about 30% this year, up from its prior guidance of the high-20% range.
Building out its crypto offering enables PayPal to connect with customers that are more engaged than those using other forms of payment, said Harshita Rawat, a managing director and senior research analyst at financial services firm AllianceBernstein Holding LP. About half of PayPal’s crypto users open its app every day, the company said.
“Both cryptocurrencies and the underlying technology have become a big strategic focus for the company,” Ms. Rawat said.
PayPal Increases Crypto Purchase Limits To $100K
The company said the move was aimed at giving customers “more choice and flexibility” to purchase crypto.
Payment provider company PayPal now allows U.S.-based users to purchase up to $100,000 in crypto weekly.
In a Thursday announcement, PayPal said it had increased the crypto purchase limit for certain customers based in the United States from $20,000 to $100,000 per week. The company said the move was aimed at giving users “more choice and flexibility in purchasing cryptocurrency.”
PayPal announced it would be moving into the crypto space in October 2020, later allowing eligible customers based in the United States to use cryptocurrencies for trading and payments. Though the company initially announced users would be limited to purchasing $10,000 in crypto each week, the feature launched with a $20,000 limit.
The platform has been expanding its features for crypto users since last year, partnering with Coinbase to allow crypto purchases through the major exchange, while the PayPal-owned payments firm Venmo launched crypto trading in April. Before the Venmo announcement, CEO Dan Schulman said he expected the average monthly volume for crypto transactions on PayPal to reach $200 million in a matter of months.
According to analytics site Statista, PayPal had roughly 392 million active user accounts as of the first quarter of 2021. The company has continued to invest in blockchain-focused firms including Blockchain Capital and blockchain intelligence platform TRM Labs.
PayPal Launches Crypto Services For UK Customers
PayPal customers with verified identities will soon have access to crypto trading. However, crypto transactions for PayPal business accounts aren’t yet supported.
Beginning this week, residents of the United Kingdom will be able to buy, hold and sell cryptocurrencies through PayPal for the first time — marking a significant milestone for a company that began offering digital asset services less than a year ago.
The global payments provider announced Sunday that U.K. customers will soon have access to Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH) through PayPal’s website and mobile app. The announcement marks the first expansion of PayPal’s cryptocurrency services beyond the United States — a service that first launched in November of last year.
Jose Fernandez da Ponte, a senior executive for PayPal’s crypto division, cited the “digitization of money” during the pandemic as one of the primary motivations for entering crypto in the first place. He continued:
“Our global reach, digital payments expertise, and knowledge of consumer and businesses, combined with rigorous security and compliance controls provides us the unique opportunity, and the responsibility, to help people in the U.K. to explore cryptocurrency.”
By offering its cryptocurrency services to U.K. residents, PayPal could play a role in increasing exposure to digital assets in the country. It’s reported that, among all European countries, PayPal penetration is highest in the U.K. at over 2 million monthly active users.
Rumors about PayPal’s crypto expansion plans have been circulating since last month when CEO Dan Schulman told investors that the U.K. is likely to get the service soon. As Cointelegraph reported, the company is also eyeing developments in decentralized finance, or DeFi, which is a possible precursor to future integration plans.
On the regulatory front, the U.K.’s Financial Conduct Authority (FCA) is increasingly cracking down on cryptocurrency exchanges that do not meet its registration requirements.
Binance’s U.K. operations were shuttered earlier this summer after the FCA warned the exchange it was not permitted to offer regulated trading activity in the country. PayPal’s da Ponte said his company is “committed to continue working closely with regulators in the U.K. and around the world” in rolling out its crypto offerings.
PayPal Reportedly Looks To Take On Robinhood With Stock Trading
PayPal has reportedly conducted discussions to acquire a broker-dealer but is unlikely to launch the new investment service this year.
American payments giant PayPal is reportedly exploring ways to offer stock trading after launching cryptocurrency trading services last year.
PayPal is looking to buy or partner with a broker-dealer to introduce its own stock trading service to compete with rivals such as crypto-friendly stock trading app Robinhood, CNBC reported on Monday.
Citing anonymous sources, the report notes that PayPal has conducted relevant discussions with potential industry players but is unlikely to launch the new investment service this year. According to CNBC, PayPal’s potential approval as a brokerage firm by the Financial Industry Regulatory Authority could take more than eight months.
As part of the alleged plan, PayPal has already hired brokerage industry veteran Rich Hagen as the new CEO for its previously undisclosed division known as “Invest at PayPal.” According to Hagen’s LinkedIn page, the executive will be responsible for PayPal’s “efforts to explore opportunities in the consumer investment business.”
Hagen is a co-founder and former president of Ally Invest, a regulated brokerage business that acquired online brokerage firm TradeKing in 2016. The new PayPal executive was also the president of TradeKing, which he co-founded back in 2005.
PayPal representatives reportedly said that the company’s potential plan to introduce a stock trading service comes in line with CEO Dan Schulman’s long-term vision to embrace many more financial services, including “investment capabilities.” The CEO previously disclosed PayPal’s product visions at the company’s investor day in February.
Following the news, PayPal shares surged 3.6%, while Robinhood’s HOOD stock tumbled more than 6%, according to data from TradingView.
Earlier in August, Robinhood said that cryptocurrency trading saw a significant surge in popularity on the platform this year, making up 41% of its revenue during Q2 2021.
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