Oct. 21 saw that having granted the first conditional crypto license from the New York State Department of Financial Services, commonly known as the BitLicense, payment giant PayPal stepped into the crypto sector, which allows customers to buy, sell and hold cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), etc. via the firm's online wallet. According to an announcement, PayPal customers will be able to use crypto as a means to shop at 26 million businesses on its network.
During an interview, Dan Schulman - PayPal's president and CEO - stated that PayPal hopes the service will be adopted worldwide so as to encourage the use of virtual digital currencies and lay a foundation for the networks for new digital currencies developed by central banks and firms.
He noted that "We are working with the central banks and thinking of all forms of digital currencies and how PayPal can play a role."
The next few weeks will see that U.S. account holders will grasp the ability to buy, sell and hold cryptocurrencies in their PayPal wallets, as per the firm. It intends to extend its line of business to Venmo and some nations in Q1 2021.
Other mainstream fintech firms, covering Square Inc - a mobile payment provider - and Robinhood Markets Inc, a stock and trading app firm, enable customers to buy and sell cryptocurrencies. However, given that its extensive influence, its move into the crypto space deserves attention. Headquartered in San Jose, California, the firm boasts 346 million active accounts worldwide and processed $222 billion in online payments in the second quarter of this year.
The huge volatility embedded in cryptocurrencies allows them to be more appealing to speculators, but much less attractive to merchants and shoppers. Compared with other mainstream payment systems, the transaction speed is slower and the cost is higher.
According to the firm, crypto payments on PayPal will be settled in legal currencies like US Dollar, meaning that businesses will not receive payments in the form of virtual currencies.
Many central banks across the world noted that they plan to develop their own CBDCs in the following few years. For example, Libra - a crypto project led by Facebook - was launched in 2019. PayPal was a founding member but dropped out after a few months.
Rumors of a planned crypto integration surfaced earlier this year. Nevertheless, the firm is often criticized in crypto sector due to unfair practices. The initiative marks a significant change for PayPal. The payments giant has historically shied away from cryptocurrency, with limited options for purchasing crypto on the platform.