PayPal Holdings Inc. PYPL.O received the first conditional license of its kind from the State Department of Financial Services in New York today. It will allow its 346 million users to buy, hold, and sell cryptocurrency directly from their PayPal accounts.
In the statement, the company confirms that PayPal customers will use bitcoin, ethereum, bitcoin cash, and litecoin starting in early 2021 to shop at the 26 million merchants on their network.
PayPal Pushing For Global Crypto Adoption
PayPal hopes the service will promote the use of virtual coins worldwide and prepare its network for a new digital currency that central banks and companies can develop, said President and CEO Dan Shulman in an interview.
He stated that they are working with the central bank and thinking about all digital currency forms and how PayPal can play a role.
In the coming weeks, US account holders will be able to buy, sell, and store cryptocurrency in their PayPal wallets. The company also plans to expand to Venmo and several countries in the first half of 2021.
Major fintech companies such as mobile payment provider Square Inc SQ.N and stock trading company Robinhood Markets Inc, are already allowing consumers to buy and sell cryptocurrencies. However, the introduction of PayPal is extraordinary, given its broad reach.
Headquartered in San Jose, California, the company has 346 million active accounts worldwide and processed $ 222 billion in the second quarter.
Cryptocurrencies are usually volatile, making them attractive to speculators but less appealing to traders and buyers. Transactions are slower and more expensive than other retail payment systems.
PayPal cryptocurrency payments’ processing is through fiat currencies such as the US dollar, meaning merchants will not accept payments in virtual coins, the company said.
The Rise of CBDCs
A study by the Bank for International Settlements (BIS) from January 2020 showed that 80% of the world’s central banks are involved in CBDC-related research. Facebook Inc FB.O led digital currency adoption by launching Libra in 2019. PayPal was a founding member but dropped out a few months later.
An analysis shows that China, Sweden, the Bahamas, the East Caribbean monetary union, and the Marshall Islands are frontrunners in the CBDC space. At present, China is the most active jurisdiction for CBDC development. China is still testing its digital Yuan, but the results have been positive so far.
PayPal has partnered with Paxos, a New York-based company, to provide cryptocurrency trading and custody services. In response, Charles Cascarilla, CEO of Paxo, stated that Paxos is excited to partner with PayPal to enter the cryptocurrency market. PayPal’s Paxos selection reflects New York’s status as the gold standard for regulating cryptocurrency.