PayPal has been granted a licence by the New York State Department of Financial Services, allowing it to roll out cryptocurrency payments via PayPal accounts from early 2021.
The Department granted PayPal a Bitlicense, which regulates any company or individual based in New York which uses virtual currencies. A limited number of companies have been granted Bitlicenses since they came into effect in 2015.
PayPal intends to roll out limited buying options in the US over the next few weeks and from early 2021 will begin allowing its users to buy, hold and sell cryptocurrencies using their PayPal accounts. It will support Bitcoin, Ethereum, Bitcoin Cash and Litecoin, with future plans likely to incorporate support for central bank-issued digital currencies.
PayPal will provide users with “educational content” about the cryptocurrency ecosystem as part of its rollout.
“Our global reach; digital payments expertise; two-sided network, and rigorous security and compliance controls provide us with the opportunity – and the responsibility – to help facilitate the understanding, redemption and interoperability of these new instruments of exchange,” said Dan Schulman, PayPal CEO.
“We are eager to work with central banks and regulators around the world to offer our support and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
PayPal is the first company to receive a “conditional Bitlicense”: a new type of licence which is intended as a stepping stone to a full licence. Under these conditions, PayPal will be required to work alongside a company which holds a full Bitlicense (Paxos Trust Company) in order to provide cryptocurrency trading and holding services.
“Paxos is pleased to partner with PayPal to support their entry into the cryptocurrency marketplace,” said Charles Cascarilla, CEO of Paxos. “We were the first company to receive a New York Trust Charter for virtual currency business activity, so it is fitting that we are also the first to support the Department’s new conditional licensing framework.
“PayPal’s selection of Paxos is a reflection of New York’s status as the gold standard for cryptocurrency regulation.”
Users will be able to instantly convert their cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. PayPal’s 26 million merchants will not be charged additional fees. The company plans to expand the features to its subsidiary Venmo in the first half of 2021.
PayPal has indicated an interest in virtual currencies for a while now, having invested in TRM Labs (a company focused on helping prevent cryptocurrency fraud) and Cambridge Blockchain (a blockchain-based ID management company), as well as having briefly been a partner in Facebook’s ambitious plans for a digital currency integrated across social media platforms.
The value of Bitcoin rose with the news, breaching the $12,000 mark per coin.
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