Major exchange platform PayPal Holdings Inc. recently announced a new feature that will allow users to buy, hold and sell cryptocurrency from their PayPal account. The company is initially allowing to use Ethereum, Bitcoin, Bitcoin Cash and Litecoin directly within the PayPal wallet. The service would be available to the account holders in the U.S. in the coming weeks.
PayPal has launched the feature with cryptocurrency start-up Paxos and plans to roll out the new crypto features to its Venmo mobile wallet and international market in the first half of 2021 enabling users to shop within its network of 26 million retailers. PayPal has been granted permission for its operation from the New York State Department of Financial Services, in the form of a conditional "Bit license" - the first such license granted.
No service fees will be charged
The company said in a press release that all cryptocurrencies can be stored "directly within the PayPal digital wallet" and that such a step is taken to increase consumer understanding and adoption of cryptocurrency. There are no service fees when buying or selling cryptocurrency through December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account. Beginning in early 2021, PayPal customers will be able to use their cryptocurrency holdings as a funding source to pay at PayPal's 26 million merchants around the globe.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and reliance of the payment system; and ability for governments to disburse funds to its citizens quickly.” PayPal CEO Dan Schulman said in a statement.
PayPal seeks support from Central Banks
PayPal hopes the service will encourage the global use of virtual coins and prepare its network for new digital currencies that may be developed by central banks. In 2019, Ueli Maurer, Switzerland’s finance minister, and outgoing president told Swiss broadcaster SRF that Facebook’s Libra project failed in its current form, “I don’t think (Libra has a chance in its current form), because central banks will not accept the basket of currencies underpinning it. The project, (Libra) in this form, has thus failed.” PayPal does not want to make any such mistake and seek partnership with central banks. PayPal is in the process of working with central banks and thinking of all forms of digital currencies and how PayPal can play a role.
PayPal pulled out of Libra Association
Not a long ago in 2019, PayPal had become the first company to pull out of an alliance that was trying to launch Facebook's digital currency Libra. PayPal said that the decision to forgo participation in the Libra Association comes at a time when the company wants to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations. PayPal is now focusing on expanding its own payments expertise and is ready to provide the services to exchange virtual fiat on its popular platform.
The announcement comes as more financial institutions signal their entry into the crypto market. This year Twitter's CEO Jack Dorsey’s mobile payment company Square offered cryptocurrency services. Stock trading app firm Robinhood Markets Inc also allow users to exchange cryptocurrencies. But PayPal’s launch is noteworthy pertaining to its widespread reach.
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