Paypal Announces Users Will Soon Be Able To Buy, Sell And Accept Crypto

Paypal has announced that it is entering the cryptocurrency market and will soon allow its users to purchase and sell Bitcoin, Litecoin, Bitcoin Cash, and Ethereum. 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 reported.

Bitcoin is rocketing in value on confirmation of Paypal plans to let users buy, sell, and enabling merchants to accept cryptocurrency, with the price sitting at $12,813.58 +7.3% at the time of this report.

Market Watch reports, Paypal plans to allow customers to buy cryptocurrency through their accounts and use cryptocurrency for merchant payments. The feature will roll-out in the next couple of weeks in the U.S. and will follow internationally next year.

Initially, PayPal users which total up to an estimated 350 million people will be able to buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin starting out. PayPal also said it will bring this function to its Venmo platform.

Early next year, PayPal users will be able to use cryptocurrency to pay for goods or services from merchants who accept PayPal. “Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with the certainty of value and no incremental fees,” the company said in a release. PayPal argued that this move will “significantly increase cryptocurrency’s utility.”

PayPal also revealed in its release that it has obtained the coveted Bitlicense by the New York State Department of Financial Services. The Bitlicense helps “encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace,” NYDFS superintendent Linda Lacewell said in PayPal’s release.

PayPal Chief Executive Dan Schulman said in the release that PayPal is “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.”

For months it has been rumored that Paypal was about to jump into the cryptocurrency space.

The New York State Department of Financial Services (DFS), also 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.

For months it has been rumored that Paypal was about to jump into the cryptocurrency space.

It was further revealed that Paypal responded to the European Commission in a letter earlier this year. Last year the European Commission opened a consultation about regulating digital assets and cryptocurrencies or what it refers to as crypto-assets. In June, responses were published, including a letter from Paypal stating that it has developed capabilities in the sector since withdrawing from Libra. This follows an earlier CoinDesk report stating PayPal and subsidiary Venmo will offer cryptocurrencies.

The company was additionally one of the initial members to commit to Facebook’s Libra, but it subsequently withdrew along with several other major players.

In the letter to the EU, it outlined this as background: “In 2019, PayPal initially signed a non-binding letter of intent to participate in the Libra Association with the intention of learning more about the proposed use of blockchain technologies to provide financial services to unbanked populations across the globe.”

And it continued: “Since the project’s inception, PayPal has taken unilateral and tangible steps to further develop its capabilities in this area, and therefore – without questioning the value of the project – took the decision not to participate in the Libra Association and to continue to focus on advancing our existing mission and business priorities to democratize access to financial services.”

it’s important to mention that PayPal has been active in the crypto space since as early as 2014. At the time, the company partnered with three bitcoin payment processors, including Coinbase, which allowed merchants in its network to accept Bitcoin as payment.

PayPal has a longstanding relationship with Coinbase, going back as early as 2014. Then two years later in 2016, Coinbase integrated, Paypal and credit cards. In 2018, Coinbase made instant fiat withdrawals to PayPal available for U.S. customers. Last year, European Coinbase users could withdraw to their PayPal accounts, followed by users in Canada, then support was added for the U.S.

It’s worth noting that PayPal was the first company to pull out of the coalition of companies involved in a Facebook-led cryptocurrency initiative, Libra Association.

Many are reporting that Paypal is now being forced into the space with its rival Square including digital assets which the latter was one of its early adopters. Square Inc., a payments company founded and run by Twitter CEO Jack Dorsey, was awarded last year with a coveted license to deal in cryptocurrencies in New York.

However, while it may seem that this is a forced move its important to note for viewers that this action has been one that has been in the works for a long time. While its true that Paypal’s CFO last year said it was too early for Bitcoin and cryptocurrency integration, the former COO stated differently years before in 2017.

In 2018, Paypal was found to have filed a mysterious patent for fast cryptocurrency transactions similar to the lightning network.

Paypal seems determined on exposure into cryptocurrency with a new system for speedy transactions that was patented in 2016 which mirrors much of the ideas behind the second layer solution the Lightning Network.

In other words, the system allows a user, in theory, to pay a third party through a second party so making it possible for Alex to pay Chris through Bill by allocating, through encryption and hashes, part of the private key to the secondary wallet.

This allows for instant payments according to PayPal, addressing latency problems due to Bitcoin requiring around 10 minutes for one confirmation. Extremely similar to what the Lightning Network claims.

However, that’s not the full story the patent actually dates back to 2016, yes you read that right. The patent was filed in August 30th, 2016, right before the major bull run. Although, its unknown if Paypal received the patent or not, it shows the companies early interest into cryptocurrency.

If that’s not enough last year Paypal joined in a $4.2 million funding round for cryptocurrency compliance and risk management platform TRM Labs.

The startup aims to help financial institutions embrace the opportunities associated with cryptocurrencies by mitigating the risks.

Cointelegraph also reports that Paypal is hiring blockchain and cryptocurrency engineers. The news outlet reported there are currently two public-facing job listings for crypto pros to go to work for PayPal.

The first listing of note is for a job titled “Technical Lead - Crypto Engineer.” The listing describes that this person will be responsible for “new initiatives for PayPal global with a focus on agility, time-to-market and innovation. The role includes designing, developing and maintaining key crypto products/features targeted towards availability, performance and scalability of PayPal services.”

The second listing worth mentioning is for a blockchain research engineer to work within the company’s research group, “a newly formed group within the Strategic Technology Enablement team chartered with establishing expertise and opinions on emerging blockchain technologies and their potential uses within PayPal.”

The clues were all there, but now its been officially confirmed by Paypal themselves. This comes as Federal Reserve chairman Jerome Powell recently announced the Fed was willing to work with private companies on a potential digital U.S. dollar, Yahoo News reported.

author
Alex Baldridge is an activist and freelance journalist from the midwestern United States who was inspired to become a writer after watching the development of the Wikileaks story and the persecution of Julian Assange. Alex is especially interested in topics like surveillance, the rise of automation, foreign policy, prison reform, and the legal system.