PayPal will begin supporting Bitcoin and other cryptocurrencies, allowing users to buy, hold, and sell cryptocurrency directly from their PayPal account, the company announced on Wednesday. There are however, two potential caveats: users, at least for now, cannot use those cryptocurrencies outside of PayPal, and paying for things using cryptocurrencies even within PayPal’s ecosystem will only be possible early next year.
PayPal is not the first payments company to support cryptocurrencies, but it is arguably the most significant one so far. Jack Dorsey-backed payments company Square added support for Bitcoin in 2018. However, PayPal supports more currencies than just that. Aside from Bitcoin, Paypal also supports other popular cryptocurrencies such as Ethereum, Bitcoin Cash, and Litecoin. Also, there are no service fees when buying or selling cryptocurrency until December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account.
Buying with Bitcoin on PayPal from 2021
Beginning in early 2021, PayPal customers will be able to use their cryptocurrency holdings as a funding source to pay at merchants who support PaPal. Consumers will be able to convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees, PayPal claimed, and added that merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates.
PayPal also said that it has been exploring partnerships with licensed and regulated cryptocurrency platforms and central banks around the world. The service will be available to PayPal accountholders in the US in the coming weeks, but Paypal said it will be available in “select” international markets in the first half of 2021. It is however not clear whether the service will be offered in India. PayPal said it was also granted a conditional “Bitlicense” by the New York State Department of Financial Services (NYDFS), without specifying details about this license.
“PayPal offering services to its customers to buy/sell cryptocurrencies is a positive sign for the overall ecosystem. Given the strong distribution and reach of PayPal, the huge user base of 346m+ globally, and many merchants around the world, with this service, it has given direct access to cryptocurrencies to numerous users. Although the users can’t redeem their Bitcoin outside PayPal, I believe it is a good starting step and it is likely that other major global payment players will follow the lead,” Sumit Gupta, CEO and co-founder of CoinDCX, an India-based cryptocurrency exchange, said in an emailed statement to MediaNama, following PayPal’s announcement.
Cryptocurrencies were banned in India for a long time, and the Supreme Court of India, just this March struck down the RBI’s banking ban against the cryptocurrencies. While placing the ban, the RBI had stated that cryptocurrencies raise concerns of consumer protection, market integrity and money laundering, among other risks. However, the apex court held that RBI’s directive was disproportionate.
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