PayPal announced on Wednesday that it would begin supporting cryptocurrencies for the first time, allowing any PayPal account holder to store, purchase, and sell popular virtual currencies starting later this year. The announcement is likely to make PayPal the largest company in the financial technology sector to support virtual currencies.
PayPal rival Square announced support for Bitcoin back in 2018 via its Cash app (Square also bought $50 million worth of Bitcoin earlier this month), but PayPal continues to support Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. PayPal also plans to extend support to its money-sending subsidiary Venmo and to international markets from early next year. For the time being, PayPal plans to launch digital currency support for US users in the coming weeks.
This move will make PayPal a major digital wallet as well as a cryptocurrency exchange, and the result could significantly increase the potential adoption of cryptocurrencies among everyday users and online merchants. PayPal has over 346 million active accounts, according to Bloomberg, of which 26 million are merchants.
“The shift to digital forms of currency is inevitable, with clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payment system; and the ability of governments to quickly disburse funds to citizens,” said Dan Schulman, CEO of PayPal. “Our global reach, expertise in digital payments, a two-sided network, and rigorous security and compliance controls give us the opportunity and the responsibility to help facilitate the understanding, redemption, and interoperability of these new exchange instruments.”
Schulman says PayPal “is eager to work with central banks and regulators around the world” to support cryptocurrency. Reuters reports transactions on PayPal’s platform will be settled using traditional fiat currency, so traders will not need to transfer digital coins to dollars after the transaction. But PayPal is currently restricting users from buying cryptocurrencies on its own platform, and existing digital coin owners can not transfer content from other digital wallets to PayPal’s.