US PayPal users can soon use crypto in lieu of fiat currency
23 Oct 2020

PayPal has announced its foray into the crypto market, launching a new service that will allow users to buy, hold, and sell digital currency.

After receiving a conditional Bitlicence from the New York State Department of Financial Services (NYDFS), through a partnership with Paxos Trust Company, PayPal users in the United States will in early 2021 be able to buy, hold, and sell bitcoin, ethereum, bitcoin cash, and litecoin, within the PayPal digital wallet.

The company is touting the move will increase consumer understanding and adoption of cryptocurrency. It plans to expand the features to Venmo and a handful of international markets in the first half of 2021.

PayPal said customers will be able to convert their selected cryptocurrency balance to fiat currency, with “certainty of value and no incremental fees”. PayPal merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates, the company added.

“In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet,” the company said.

PayPal said it will provide accountholders with educational content to help them understand the cryptocurrency ecosystem, the risks and opportunities related to investing in cryptocurrency, and information on blockchain technology.

“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed, and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” PayPal president and CEO Dan Schulman said.

“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.”

The CEO wants to work with global central banks and regulators to offer its support and to “meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce”.

“NYDFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to germinate and test their ideas, for a dynamic and forward looking financial services sector, especially as we work to build New York back better in the midst of this pandemic,” NYDFS superintendent Linda A. Lacewell said.

Earlier this week, the US Financial Crimes Enforcement Network (FinCEN) announced non-compliance with its unregistered money services business (MSB) rules.

The FinCEN said it had assessed a $60 million civil money penalty against Larry Dean Harmon, who is the founder, administrator, and primary operator of Helix and Coin Ninja — convertible virtual currency “mixers” or “tumblers” — for violations of the Bank Secrecy Act (BSA) and its implementing regulations.

The FinCEN said Harmon operated Helix as an unregistered MSB from 2014 to 2017 and Coin Ninja from 2017 to 2020.

By Asha Barbaschow, ZDNet, 21 October 2020

Read more at ZDNet

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