PayPal has announced that customers will be able to use their accounts to trade a range of cryptocurrencies, including Bitcoin.
Ethereum, Litecoin, and Bitcoin spin-off Bitcoin Cash will also be added to the line-up. PayPal users will also be able to store cryptocurrencies directly within their PayPal digital wallet, the company announced.
Sellers themselves will not receive any of the cryptocurrencies being used. Instead, PayPal will convert the cryptocurrency into the relevant national currency.
While the initial rollout will take place in the US over the next weeks, a full rollout is expected by early next year. The company said it plans to expand the trading features to Venmo, as well as select international markets in the first half of 2021.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said PayPal President and CEO Dan Schulman.
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce,” he said.
To facilitate the move, PayPal received what it called a “first-of-its-kind” conditional Bitlicense by the New York State Department of Financial Services (NYDFS).
This will also include giving account holders access to educational content to help them understand cryptocurrencies and the risks and opportunities of investing in them.
PayPal will not charge service fees when buying or selling cryptocurrency through December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account.
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While there are few concrete reports of how many cryptocurrency users there are, a University of Cambridge study from 2017 suggested that there 2.9-5.8 million. The number of people using blockchain currencies may have risen as high as 55 million during the third quarter of this year.
PayPal on the other hand has around 346 million users as of 2020. The offering will add a considerable number of potential cryptocurrency adopters to the current pool.
The move will also open up cryptocurrency payments to a range of businesses that accept PayPal. At present, the range of mainstream businesses that accept cryptocurrencies is limited – Microsoft accepts Bitcoins on its online Xbox store and Starbucks accepts Bitcoin payments through the Bakkt app.
PayPal on the other hand has is accepted by around 26 million groups, broadening the potential market available to cryptocurrencies.
Bitcoin prices were driven up to around £9,800, their highest level in years, on the back of PayPal’s offering.
The price of Bitcoin peaked in late 2017 at just under £15,000 each. After falling to around £2500 a year later, they have since rallied. Though prices have been volatile, they have occasionally reached a ceiling of around £9,000.
Ethereum and Litecoin saw similar trends, spiking in late-2017 early-2018 and dropping off by the end of the next year. However, neither have seen similar rallies to Bitcoin since then.