PayPal has launched a new service that will allow customers to buy, hold and sell cryptocurrency directly from their PayPal account. The move is part of payments firm’s plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its merchants worldwide.
The company is initially supporting select cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC), directly within the PayPal digital wallet.
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, beginning in early 2021.
Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. PayPal merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates.
It will also provide enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost and speed of cryptocurrency-based transactions.
The service will initially be available to PayPal account holders in the U.S. in the coming weeks through a partnership with Paxos Trust Co., a regulated provider of cryptocurrency products and services. It will be expanded to Venmo and select international markets in the first half of 2021.
PayPal has also been granted a first-of-its-kind conditional Bitlicense by the New York State Department of Financial Services (NYDFS). This approval comes after NYDFS’s June 2020 announcement to grant a conditional Bitlicense to encourage, promote, and assist interested institutions to access the New York virtual currency marketplace through partnerships with New York authorized virtual currency firms such as Paxos in this case.
PayPal announced that 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.
PayPal has been exploring the potential of digital currencies through partnerships with licensed and regulated cryptocurrency platforms and with central banks around the world.
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. However, advanced technological platforms now offer the possibility of mainstreaming digital currencies.
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