- PayPal has officially launched its cryptocurrency platform, three weeks after it was announced
- PayPal U.S. customers can now buy, sell, and spend cryptocurrency, with a $20,000 weekly purchase limit
- The company praised the “advanced technological platforms” that are allowing crypto to go mainstream
PayPal has officially launched its cryptocurrency service, three weeks after the payments giant announced the platform. According to a press release posted yesterday afternoon, U.S. customers can now buy, sell, and spend cryptocurrencies on the platform, with the payments giant also announced that it has raised the weekly purchase limit to $20,000.
We are pleased to announce that starting today, all of our eligible US customers can now buy, hold and sell #Cryptocurrency directly from their PayPal accounts. We’ve also increased our weekly purchase limit to $20K. Learn more: https://t.co/5yrpNOuA6y pic.twitter.com/2nZHm9qCNI
— PayPal (@PayPal) November 12, 2020
PayPal Praises Technological Advancements in Crypto
PayPal’s venture into cryptocurrencies made headlines when it was announced on October 21, with global media outlets picking up on the story. The move is probably the biggest leap for mainstream adoption of cryptocurrencies in their 12-year history, despite the fact that the platform will operate on a Contract for Difference (CFD) basis.
In announcing the opening up of the platform, PayPal commented on why they have chosen now to join the cryptocurrency sector, stating that “the promise of advanced technological platforms offers the possibility of mainstreaming digital currencies”
“Conditional License” Awarded by NYDFS
PayPal also announced that part of the legal hoop-jumping it had to perform to be able to offer a cryptocurrency service included obtaining a “first-of-its-kind conditional Bitlicense [sic] by the New York State Department of Financial Services (NYDFS).”
Part of this conditional license appears to involve PayPal providing “educational content to help them (customers) understand the cryptocurrency ecosystem, the risks and opportunities related to investing in cryptocurrency, and information on blockchain technology.”
1:1 Crypto Ownership Status Unclear
There was further excitement on the announcement of the launch after a clause in the BitLicense did the rounds on crypto Twitter which seemed to suggest that PayPal would be forced to buy up all the crypto that their customers bought 1:1:
The big deal about PayPal offering cryptocurrencies like $BTC, $ETH, $LTC and $BCH is that they have to back every single coin at the same amount and currency as they sell it to customers (even when you can’t withdraw em). Why is that? Let me explain: 1/3
— Django BRRRRiꜩ 🌮 (@djangobits) November 12, 2020
However, there are very good reasons why this will not be the case. Firstly, we don’t know what exemptions the conditional BitLicense contains compared to the full one; and second, Paxos is the company backing the PayPal venture, and it’s highly doubtful that they will have put themselves in a position where they could be on the hook for more than 300 million users’ cryptocurrency requirements.
Whatever the ins and outs of the PayPal deal, it is clear that it is huge news for the cryptocurrency space and it will be intriguing to see what kind of uptake the platform experiences in the weeks after its launch, especially with Bitcoin ripping over $16,000 yesterday.