PayPal is putting crypto at the fingertips of its 346M customers, helping digital assets break away from speculation as their main use case, and drive a real economy where you can earn, save, invest and now spend.
In the coming weeks, Paypal customers will be able to buy, hold and sell Bitcoin, Ether, Bitcoin Cash and Litecoin within the company’s digital wallet, according to an announcement by the company today. Initially, the service will be available only to U.S. users, with plans to expand the features to Venmo and select international markets in the first half of 2021.
Crucially, PayPal customers will also be able to use crypto to pay at the company’s 26M merchants around the globe beginning in early 2021.
BTC is up 12% on the news, jumping past $12,800, the highest since June 2019, while ETH is climbing towards $400 for the first time since August.
Not Your Keys
It’s important to note that while PayPal users will be able to hold a crypto asset balance, they won’t hold the tokens themselves — in other words, they won’t control or own the private keys, according to the terms.
This means users won’t be able to send crypto to other accounts and wallets, and they’ll have to exchange their digital assets for fiat to withdraw their balance —at least for now. All crypto custody and trading will be performed by Paxos Trust.
While some in crypto may downplay the news saying “not your keys not your coins,” it’s still bullish.
First, because of the sheer increased demand for crypto: PayPal will need to buy the supported coins to fulfill clients’ orders.
Second, PayPal’s move continues to legitimize crypto as both currency and its own asset class. The news comes weeks after MicroStrategy and Square added Bitcoin to their balance sheets,
Third, PayPal sees the “shift to digital forms of currencies is inevitable,” including by central banks, and soon other fintechs and banks will see this too. A growing number of financial institutions is set to allow their customers to hold and transact with digital assets, strengthening the bridge from centralized finance to decentralized finance.
As more and more people start to use crypto, a portion of them is bound to cross this bridge.