- PayPal might be about to join the crypto game according to reports
- A PayPal crypto offer and trading feature would be great for crypto newbies, but purists would likely baulk at the compromises
- PayPal would likely follow the Revolut model of an in-house exchange rate and would impose sending restrictions
The news that money transfer and payments giants PayPal are on the verge of announcing the ability to buy and sell cryptocurrency from within their app sent the crypto world into a mini meltdown yesterday. This undeniably good news would be great for the industry as a whole, but the route PayPal would likely go down will horrify crypto purists.
PayPal Moving With the Times?
Until now, PayPal has had a very negative attitude toward crypto, potentially because it threatens (ideologically at least) its business model. However, recent CEOs have moved with the times a little, such as David Marcus who now heads Facebook’s Libra effort (which PayPal quit last year) and present CEO Daniel Schulman who said in November last year that he owned some Bitcoin.
There has certainly been a softening in attitude at the top level then, and with crypto now being added to the portfolios of well respected hedge fund managers as well as institutions, it is clear that the trend is changing. PayPal will also be aware that their new generation of fintech rivals such as Cash, Revolut, and Square have crypto functionality built in – they simply can’t ignore crypto any longer, particularly as plenty of people already use PayPal for buying crypto anyway, and they are missing out on a potentially huge revenue stream.
PayPal Crypto Offering Will Be Highly Restrictive
While the notion of PayPal adding some kind of crypto trading facility is definitely good news for the space, it might not be great news for those who are already used to what is on offer. A PayPal cryptocurrency exchange would likely include heavy KYC/AML, and the sending/receiving options from the PayPal crypto wallet would be highly limited, likely only to other PayPal users, at least initially.
The trading mechanism would likely follow Revolut’s model, meaning that traders would be forced to use PayPal’s own in-house exchange rates, and there would be little chance of you being able to own your own crypto – PayPal would own your keys, and therefore your funds, and could lock them up whenever they wanted.
PayPal the Robinhood of Crypto?
While crypto purists will baulk at some of the likely restrictions PayPal would apply to their crypto offering, it is not aimed at them. It will be aimed at the person in the street who has heard about crypto but has no idea how to go about buying some, and has the potential to open the floodgates to more retail traders than any facility has managed yet. These people won’t care about the fact they don’t own their keys or their funds or that they’re using an internal exchange rate – they’ll just be happy to be able to finally take part and play the game. Call it the Robinhood effect.
PayPal’s CFO John Rainey said last May that crypto integration was “a little early” but added that the company would always want to “participate in that in whatever form it takes in the future.” With a PayPal crypto offering potentially just around the corner, we might be able to finally say that the opportunity for mainstream adoption is, after many years of trying, finally here.