Mainstream payments powerhouse PayPal announced this week it was on the verge of launching cryptocurrency wallet and payments services, with plans to eventually bring these features to Venmo, the company’s mobile payments subsidiary.
Why it matters: PayPal’s high-profile embrace of crypto is a major legitimizing development for bitcoin, ether, and the wider cryptoeconomy. Not long ago, the payments giant was seen as a major obstacle to crypto gaining mainstream traction. Now, the company is poised to be a major accelerant to crypto’s adoption.
Details: Reuters first reported PayPal’s crypto pivot, after which the firm released a press release with more info.
- Paxos Crypto Brokerage will facilitate PayPal’s crypto features.
- The new services will initially support Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
- U.S. PayPal users will be the first to have access to these services “in the coming weeks.” The company will expand this access to Venmo accountholders and international users starting in 2021.
- Next year will also see PayPal open up crypto payments to its international network of 26 million merchants.
- The New York State Department of Financial Services (NYDFS) granted PayPal a conditional Bitlicense, which the regulator has never done before, for the company’s coming crypto activities.
- PayPal is looking to expand its digital currency work further, as company CEO and president Dan Schulman said on Wednesday:
“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.”
The big picture: PayPal jumping into the crypto arena is undoubtedly going to influence more than a few mainstream companies to take a harder look at crypto than they ever have before. Some of these firms will take the same leap, and more high-profile investments will flow in, too, like was seen this fall when business intelligence giant MicroStrategy bought nearly 40,000 BTC worth $425 million at the time.
Bullish markets: PayPal’s crypto wallet services sent a shockwave of optimism throughout the cryptoeconomy, which in turn translated to buy pressure across crypto’s top assets. Amid the buzz BTC breached $13,000 for the first time since this summer and ETH neared $400.
What the experts are saying: Analysts and innovators went into a frenzy dissecting the PayPal crypto news, and accordingly there was no shortage of commentary highlights.
- Social Capital CEO and Virgin Galactic Chairman Chamath Palihapitiya said: “After PayPal’s news, every major bank is having a meeting about how to support bitcoin. It’s no longer optional…”
- Gemini co-founder and CEO Tyler Winklevoss said: “PayPal is an important bridge between the mainland and the island of crypto. The diaspora from legacy finance is happening and this is the kind of infrastructure that will help make that happen.”
- Galaxy Digital CEO Mike Novogratz said: “This PayPal news is the biggest news of the year in crypto. All banks will now be on a race to service crypto. We have crossed the rubicon people.”
- CoinShares CSO Meltem Demirors said: “What’s really exciting here is Venmo, which is owned by Paypal, has 300 million active users. They’re millennials, they’re all the target audience for bitcoin … in terms of retail exposure to digital currencies, PayPal is the largest distribution channel available in the United States.”
The bottom line: Like Robinhood, out of the gate PayPal won’t let users deposit or withdrawal their own crypto. That’s never going to fly with the “not your keys, not your crypto” crowd. It’ll be interesting to see if the company moves away from this model in the future, but in the meantime expect to see PayPal serve as a significant crypto adoption funnel regardless.
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