On Thursday Nov. 12, PayPal’s crypto trading and payments went live for eligible United States customers.
On Oct. 21, PayPal announced the launch of a new service enabling its customers to buy, hold and sell cryptocurrencies directly from their PayPal account. PayPal also signed plans to significantly increase crypto’s utility by making it available as a funding source for purchases at its 26 million merchants internationally.
This announcement made an end to its waitlist for customers who were looking to use cryptocurrencies in the U.S. trading features a limit of $20,000, double the original amount announced at $10,000.
The announcement claimed that the migration towards digital payments and digital representation of value kept increasing, and is driven by factors such as Covid-19 pandemic and an increased interest in digital currencies from consumers and central banks.
A PayPal representative said that the company will keep alerting its U.S. customers about the general availability of cryptocurrency services in the coming days so they could use the services if interested.
PayPal plans to launch more global services at the beginning of 2021, alongside cryptocurrency payments on Venmo. The initial announcement to integrate cryptocurrency in its platform had positive effects on Bitcoin’s price.
Stringent regulations and conditional licenses
PayPal has become the first recipient of the New York Department of Financial Services (NYDFS) conditional Bitlicense, which is a program that NYDFS announced this past summer. This conditional Bitlicense has its limitations in that PayPal has to have a pair off with firms that have a full Bitlicense who will act as a sort of mentors.
According to NYDFS, these conditional licenses may also be subject to heightened review, whether in regard to the scope and frequency of examination or otherwise. The license lasts for two years and a renewal or upgrade depends on Superintendent Linda Lacewell’s decision.
The scrutiny and regulations that PayPal will have to undergo are not clear to the general public and specifically its over 340 million worldwide users. However, its FAQs segment shed a lot of light on the form of differences that users will experience as opposed to other crypto platforms.
For instance, PayPal wallet will not only be custodial but isolated. Users will not have and hold private keys and they will not be able to move their assets to other wallets. Users will only hold the crypto they buy or receive in their accounts and cannot transfer to other accounts on or off PayPal.
Although this is a huge step for cryptocurrencies in achieving widespread use and adaption, it begs the question whether the coins held in such platforms that have to comply with stringent regulations are really a user’s, or whether they are real crypto coins.
Image courtesy of Paypal