PayPal has been granted a first of its kind conditional Bitlicense by the New York State Department of Financial Services and will begin enabling its 346 million users to to buy, hold and sell cryptocurrency directly from their PayPal account from early next year.
PayPal customers will be able to use bitcoin, ethereum, bitcoin cash and litecoin to shop at the firm's 26 million merchants worldwide, starting in early 2021. Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. There will be no additional costs imposed on merchants either, as all transactions will be settled with fiat currency at their current PayPal rates.
The company plans to expand the features to Venmo and select international markets in the first half of 2021.
PayPal expects the service to drive mainstream adoption of crypto-cash as it prepares its network for arrival of central-bank issued digital currencies.
Dan Schulman, president and CEO, PayPal, says: "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."
PayPal has teamed up with Paxos, a New York State chartered trust company, to provide cryptocurrency trading and custodial services.
“Paxos is pleased to partner with PayPal to support their entry into the cryptocurrency marketplace,” says Charles Cascarilla, CEO, Paxos. “We were the first company to receive a New York Trust Charter for virtual currency business activity so it is fitting that we are also the first to support the Department’s new conditional licensing framework. PayPal’s selection of Paxos is a reflection of New York’s status as the gold standard for cryptocurrency regulation.”
PayPal also has its sights set on a blockchain-based framework for future iterations. In 2019, PayPal Ventures, the company's venture capital arm, invested in TRM Labs, a company focused on helping financial institutions prevent cryptocurrency fraud and financial crime, and Cambridge Blockchain, a blockchain-based identity management and compliance software company.
In a statement, the company says: "PayPal will continue exploring the potential of distributed ledger technologies to improve financial services and assure they are faster, more secure and less expensive. The company intends to work hand-in-hand with regulators, governments and central banks in this quest."
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