Crypto just got a shot at going mainstream in 2021.
What we know:
- In a press release this morning, PayPal said buy, sell and hold features would be live within the next few weeks but some users, the features are already available.
- PayPal’s implementation does not allow bitcoin or other tokens to be withdrawn. Once you buy or deposit, the service is your crypto bank until you sell.
- Initially the service supports Bitcoin, Ethereum, Bitcoin Cash and Litecoin
- This is a developing story, stay tuned for updates with full coverage below
PayPal officially confirmed Wednesday it is entering the cryptocurrency market. The payments giant, with 346 million active accounts around the world, pledged to make cryptocurrency “a funding source for purchases at its 26 million merchants worldwide.”
CoinDesk first reported PayPal was planning a move into crypto back in June of this year, citing anonymous sources. A month later, CoinDesk reported the Paxos exchange had been selected to support PayPal in its crypto endeavors.
In a blog post Wednesday, PayPal said the need for digital payments of all sorts had been driven by the COVID-19 pandemic, although the move had been in planning since at least late last year, and following PayPal’s short-lived dalliance with the Facebook-spawned libra project.
Beginning in early 2021, PayPal customers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees, PayPal said. Its merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates.
“In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost and speed of cryptocurrency-based transactions,” said the blog.
PayPal gets BitLicense
As part of Wednesday’s formalities, the New York State Department of Financial Services (DFS), said it had granted the first “conditional BitLicense” to PayPal for a partnership with Paxos Trust Company, enabling customers to buy and sell cryptocurrencies.
DFS said it was making good on a promise last year from Superintendent of Financial Services Linda A. Lacewell to take a fresh look at its regulatory framework for virtual currencies, with a view to fostering innovation in New York State.
“DFS’s approval today follows our June 2020 announcement for a new framework for a conditional Bitlicense to encourage, promote and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firms,” said Lacewell in a statement.
“DFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to germinate and test their ideas, for a dynamic and forward-looking financial services sector, especially as we work to build New York back better in the midst of this pandemic,” she said.
Now, with the DFS’s approval, New York State-chartered Paxos will be able to provide trading and custodial services to PayPal to allow the fintech giant’s 346 million customers to buy, sell and hold cryptocurrency. Four DFS-approved digital assets will be initially available: bitcoin, bitcoin cash, ether and litecoin, according to the DFS statement.
Since 2015, DFS has approved 26 entities to engage in virtual currency business in New York State, including Wednesday’s announcement.
Update (Oct. 20, 13:52 UTC): Added new information and context to introductory paragraphs.