PayPal to offer crypto payments next year
PayPal users will be able to buy, hold and sell cryptocurrency directly from their account.
PayPal will also make cryptocurrency available as a funding source for purchases at its 26 million merchants worldwide.
Users will initially be able to transact with Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet.
The service will be available to PayPal accountholders in the US in the next few weeks. The company plans to expand the features to its subsidiary Venmo, which is also an online wallet, and “select international markets” in the first half of 2021.
The service is enabled in the US through a partnership with Paxos Trust Company, which is a regulated provider of cryptocurrency products and services.
PayPal says that mainstream adoption of cryptocurrencies has traditionally been hindered by their limited utility as an instrument of exchange due to volatility, cost and speed to transact.
But it says the “promise of advanced technological platforms” offer the possibility of making digital currencies mainstream.
According to a survey by the Switzerland-based Bank for International Settlements, one in 10 central banks expect to issue their own digital currencies within the next three years.
Dan Schulman, president and CEO at PayPal, said: “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.
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
As part of the offering, PayPal will provide accountholders with educational content to help them understand the cryptocurrency ecosystem, the risks and opportunities related to investing in cryptocurrency, and information on blockchain technology.
There are no service fees when buying or selling cryptocurrency up to 31 December, and there are no fees for holding cryptocurrency in a PayPal account.
The Financial Conduct Authority announced earlier this month that it had banned the sale of derivatives and exchange traded notes (ETNs) that reference certain types of crypto-assets to retail consumers.