PayPal has officially joined the world of cryptocurrency after it announced that it will be allowing customers to buy, sell and hold bitcoin, and other virtual coins, using the US digital payments company’s online wallets.
Customers of PayPal Holdings Inc will also be able to use cryptocurrency to shop on its network starting early in 2021, which includes some 26 million merchants.
The company said it hopes the service will support global use of virtual coins, while also preparing its network for new digital currencies by central banks and corporations, President and Chief Executive Dan Schulman said in an interview, as reported by Reuters.
“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,” he said.
In the coming weeks, US account holders will be able to buy, sell and hold cryptocurrencies in their PayPal wallets, the company said. It is also aiming to expand to Venmo – a mobile payment service owned by PayPal, and to some countries in the first half of 2021.
PayPal is not the first mainstream fintech company to embrace cryptocurrency, with mobile payments provider Square Inc and stock trading app firm Robinhood Markets Inc allowing users to buy and sell cryptocurrencies, however PayPal’s launch is significant considering its vast reach.
The company has 346 million active accounts around the world and processed some $222 billion (€187.3 billion) in payments during the second quarter of 2020. It is currently based in San Jose, California.
It has been noted that since cryptocurrencies tend to be volatile and thus attractive to speculators, the same cannot be said for merchants and shoppers. Transactions have been slower and more expensive than other mainstream payment systems.
PayPal has explained that cryptocurrency payments on the platform will be settled using fiat currencies, such as the US dollar, meaning merchants will not receive payment in virtual currency.
Central banks around the world have announced their intention to develop digital versions of their currencies, while Facebook has led the creation of a cryptocurrency project called Libra in 2019, of which PayPal was a founding member but dropped out some months later.
The company has secured its first conditional cryptocurrency licence from the New York State Department of Financial Services, and will initially allow purchases of bitcoin and other cryptocurrency such as Ethereum, bitcoin cash and Litecoin.