PayPal’s New Feature Enabling Crypto Transfers
On June 7, 2022, PayPal made a significant announcement that was welcomed by many of its crypto users. When the platform first allowed its users to hold and trade crypto back in 2020, it was celebrated for supporting the cryptocurrency industry. However, it initially limited the usability of digital tokens by preventing users from withdrawing their crypto. This new feature addresses consumer demand, enabling users to transfer their crypto to and from external wallets and exchanges, including major platforms like Binance, FTX, and Coinbase. Moreover, PayPal’s “Checkout with Crypto” function has sparked growing interest in business transactions among merchants on the platform. The feature is currently available to select U.S. customers, with plans for a wider rollout in the coming weeks.
As large fintech companies, including PayPal, pivot towards more open systems, this move marks a shift away from custodial platforms. Since 2020, PayPal users could trade and hold Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. With this new feature, PayPal’s offerings now resemble those of other crypto services like Robinhood, which introduced crypto withdrawals in April 2021, a capability PayPal is now matching.
Insights from the Vice President
In 2021, PayPal’s Senior Vice President, Jose Fernandez da Ponte, hinted that the company was working on allowing users to transfer their digital assets to third-party wallets. He explained that this step would be part of PayPal’s evolution into a top-tier platform, giving users the ability to interact with the broader crypto ecosystem. He also noted that by transferring their crypto to PayPal, users could spend their tokens through “Checkout with Crypto” at various merchants, further expanding the utility of their holdings. PayPal’s crypto functionality now enables participation in decentralized finance (DeFi), including permissionless loans and liquidity provisions for platforms like Uniswap. As crypto enthusiasts speculate on earning yield and purchasing NFTs, da Ponte emphasized the importance of stablecoins in enhancing the utility of digital assets.
Impact of PayPal’s New Crypto Function
This development marks a major milestone for the cryptocurrency industry. PayPal, which owns Venmo and serves over 400 million users globally, facilitates the transfer of funds worldwide and is widely accepted as a payment method by merchants. Da Ponte pointed out that PayPal’s move into crypto reflects the company’s commitment as a payments and commerce leader, offering users better access to the cryptocurrency ecosystem. This announcement led to a slight increase in PayPal’s stock price as well as a bull run in the crypto markets. Mikkel Morch, executive director at digital asset hedge fund ARK36, believes fintech and payment companies are integrating crypto despite the ongoing bear market, driven by a growing demand for easy access to digital assets. This move signals positive growth for the cryptocurrency industry as mainstream adoption accelerates. Walter Hessert, Head of Strategy at Paxos, noted that PayPal is now the largest blockchain-enabled digital wallet for consumers.
PayPal also revealed that it received full approval for a Bitlicense from the New York Department of Financial Services (NYDFS), becoming the first company to convert from a conditional Bitlicense to a full one. This achievement highlights PayPal’s commitment to responsible innovation and improving the accessibility and utility of digital currencies. Ivan Ravlich, CEO of Hypernet Labs, believes PayPal is a pioneer in catering to crypto users, particularly due to its compatibility with decentralization.
PayPal reminded users that cryptocurrency transactions are irreversible, urging caution when conducting such transactions. While there are no network fees for sending or receiving crypto on PayPal, the exchange rates may not be as competitive as those found on other major crypto platforms and exchanges.
CryptoChipy views PayPal’s latest move as a long-term strategy, reinforcing its commitment to the cryptocurrency market.
