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Paypal unveiled its blockchain crypto trading on November 10, 2020. Back then, they aimed to make their crypto trading available to 26 million users worldwide.
Let us see how Paypal’s crypto trading is doing today.
Paypal’s Crypto Trading
The global payment company launched their cryptocurrency trading last 2020. It allowed traders to transact up to $20,000 worth of digital assets per week.
Paypal CEO Dan Schulman stated that the company started supporting cryptocurrencies due to the unavoidable path that leads to a wider adoption of crypto.
“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.”
In its initial announcement, the payment company said that their crypto move will allow shoppers to pay using crypto at any business that is part of their merchant network.
Clients will pay using fiat currencies, then Paypal is responsible for the conversion. This encourages customers to buy using cryptocurrencies since Paypal support will help them with changing it to digital currencies.
What Crypto Coins Does Paypal Support?
Two years ago, they announced that they would support Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC).
Users will be able to buy, sell and hold crypto directly using the application. As a result there is a wallet dedicated to storing digital assets that the clients buy, sell and hold.
Paypal is in partnership with Paxos to deliver this crypto service to merchants. Additionally, the New York Department of Financial Services(NYDFS) issued its first conditional Bitlicense. The NYDFS is one of the most rigid sub-national US-based financial regulators.
Who owns the stored Crypto in Paypal Wallets?
Clients’ usage of paypal is not limited to payments only. They can buy and sell crypto coins. Also, they have the option to hold crypto. However, it must be made clear that the coins that people buy via Paypal are not technically theirs.
Paypal officially oversees the crypto wallets. This means that you don’t have direct control over the digital currencies that you bought.
External Wallets and Address
Every investor who purchases crypto assets needs to protect two highly sensitive things: their public key and private key. The public key refers to the investor’s wallet address. On the other hand, the private key is what gives you control over your cryptocurrencies.
Nevertheless, in the case of crypto trading using Paypal, you can access your wallet using the public address. But, it is the company who has control of your private key.
Specifically, this is a custodial arrangement wherein Paypal issues an IOU for your crypto assets and you trust them that they are indeed keeping it safe for you.
Furthermore, this kind of system meant that investors cannot transfer their coins to a cold storage or a wallet that is not part of Paypal’s network. However, in June 2022, they announced that they will allow clients to move their digital currencies to external wallets.
The upside to this structure is the company’s protection of a user’s private keys. Crypto beginners may explore the crypto space more safely with Paypal safeguarding their private keys.
Paypal’s Crypto Hold of $604 million
In the December 2022 annual report that Paypal submitted to the U.S. Securities and Exchange Commission (SEC), they revealed that they held over $604 million worth of various cryptocurrencies.
The breakdown is as follows, the payment company held $291 million of Bitcoin, $250 million worth of Ethereum, and a combined $63 million worth of Litecoin and Bitcoin Cash.
Crypto holdings make up for 67% of the company’s total financial liabilities. Over all, their assets gained a value of $902 million as of Dec. 31.
Dan Schulman’s positive attitude towards cryptocurrencies will certainly influence Paypal’s direction in relation to crypto sale, Bitcoin, Ethereum, and transferring cryptocurrencies.
In conclusion, Paypal’s current framework may be suitable for crypto beginners and those who want an authority figure protecting their digital assets.