2020-10-21 08:00:00

Bitcoin hits 2020 high as PayPal allows cryptocurrencies on platform

US account holders will be able to deal in digital coins, including Bitcoin, Ethereum, Bitcoin Cash and Litcoin in the coming weeks. Photo: Dado Ruvic/Reuters

Paypal has joined the world of cryptocurrency, sending the value of Bitcoin (BTC-USD) more than 6% higher to $12,700 (£9,663) – its highest level of the year.

The California-based payments platform said the launch of its new service would allow customers to buy, hold and sell cryptocurrency directly from their PayPal account.

US account holders will be able to deal in digital coins, including Bitcoin, Ethereum, Bitcoin Cash and Litecoin in the coming weeks. PayPal also plans to expand its mobile payment service Venmo in the first half of 2021.

Customers will be able to use their cryptocurrency holdings to pay for goods and services at PayPal’s 26 million merchants worldwide from early next year.

However, merchants will not receive virtual coin payments, with cryptocurrency payments being settled using fiat currencies, such as the US dollar, the company said.

PayPal has partnered with Paxos, a New York chartered trust company, to provide cryptocurrency trading and custodial services.

President and chief executive Dan Schulman told Reuters in an interview: “PayPal hopes the service will encourage global use of virtual coins and prepare its network for new digital currencies that may be developed by central banks and corporations.

“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role.”

READ MORE: Paypal to charge customers for inactive accounts

Neil Wilson of Markets.com said: “It is hard to know for sure right now what it means, but because of PayPal’s sheer scale and reach I would think the development may be a potential game-changer in the mass use of cryptos, though of course there are many other barriers to its widespread consumer and business adoption.”

The news rekindled bullish spirits in the crypto space. Bloomberg reported that its Galaxy Crypto Index rose as much as 5.1% on the back of the news. The index tracks some of the biggest virtual coins.

PayPal has 346 million active accounts around the world and processed $222bn (£171bn) in payments in the second quarter of the year.

Watch: What are negative interest rates?

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