PayPal is launching a new cryptocurrency service. The firm said it will allow customers to buy, hold and sell cryptocurrency directly from a PayPal account, and also said it will make cryptocurrency available as a funding source for purchases at its 26 million merchants.
"The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly," said Dan Schulman, president and CEO of PayPal, in a release.
PayPal is introducing the ability to buy, hold and sell select cryptocurrencies—initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin—directly within the PayPal digital wallet. The service will be available to PayPal accountholders in the U.S. in the coming weeks. The company plans to expand the features to Venmo and some international markets in the first half of 2021. The service is enabled in the U.S. through a partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services, said PayPal.
PayPal has also been granted a first-of-its-kind conditional BitLicense by the New York State Department of Financial Services (NYDFS).
As part of the service, PayPal also said it plans to provide accountholders with educational content to help them understand the cryptocurrency ecosystem, the risks and opportunities related to investing in cryptocurrency, and information on blockchain technology. There are no service fees when buying or selling cryptocurrency through December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account.
Beginning in early 2021, PayPal customers will be able to use their cryptocurrency holdings as a funding source to pay at PayPal's merchants. Consumers will be able to convert their elected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. PayPal said merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates. In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost and speed of cryptocurrency-based transactions.