PayPal Partners With Paxos To Offer Crypto Payments In 2021
- Through this partnership, PayPal was able to obtain a conditional license from the NYDFS, enabling its customers to buy and sell cryptocurrencies.
- PayPal customers will also be able to use crypto to shop in any of its 26 million merchants around the globe, starting from early 2021.
PayPal logo and sign in front of PayPal Holdings headquarters building in North San Jose Innovation District in Silicon Valley, San Jose, California, USA, 17 March, 2019. Michael Vi/Shutterstock
The Paxos Trust Company has partnered with payments giant PayPal, enabling its customers to buy and sell cryptocurrencies directly through its app, the firm said in a press release shared with The Chain Bulletin on 21 October.
According to the announcement, Paxos will be powering PayPal’s new service by providing trading and custodial services to the payments giant, enabling its customers to “buy, sell, and hold cryptocurrency” directly through the app. In addition, by partnering with Paxos PayPal was able to obtain a conditional cryptocurrency license from the New York State Department of Financial Services (NYDFS), also known as a BitLicense.
The Superintendent of Financial Services, Linda A. Lacewell, said in a statement:
“DFS’s approval today follows our June 2020 announcement for a new framework for a conditional Bitlicense to encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firms.”
The new service will initially support four NYDFS approved digital assets, including Bitcoin, Ethereum, Bitcoin Cash and Litecoin. PayPal will not only enable the buying and selling of these cryptocurrencies, but will also allow its users to shop with crypto in any of its 26 million merchants around the globe. Similarly to other crypto merchant solutions, the payments will be settled through traditional fiat currencies, while PayPal takes care of the conversion between crypto and fiat “with certainty of value and no incremental fees”.
PayPal users will be able to make use of the new service starting early 2021, the firm said in its own press release. With its 346 million active accounts and $222 billion in volume processed in Q2 2020, PayPal is one of the largest payment processors around the world, which makes it perfectly suited to increase the awareness, education, adoption and utility for digital currencies.
By taking a “regulation-first approach”, Paxos was able to secure the first ever Trust charter to custody and offer crypto and blockchain-based digital assets back in 2015. Today’s announcement marks another regulatory first for the company, with its help PayPal was able to obtain the first virtual currency conditional license from the New York State Department of Financial Services.
Rumors of the PayPal Paxos partnership started to emerge in July, when unnamed sources told crypto news outlet CoinDesk that PayPal was planning to roll out direct sales of cryptocurrency to its users. The payments giant was initially going to enter the crypto space back in 2019 as a founding member of the Facebook-led Libra association, though the company withdrew from the governing body of the project in October of the same year.
- PayPal USD (PYUSD) will be issued by Paxos and the Ethereum blockchain, and is backed by U.S. dollar deposits, short-term Treasuries, and similar cash equivalents.
- The company said the stablecoin can be redeemed for U.S. dollars at all times, and exchanged for any other crypto supported by the platform, including BTC, ETH, BCH, and LTC.
PayPal logo and sign in front of PayPal Holdings headquarters building in North San Jose Innovation District in Silicon Valley, San Jose, California, USA, 17 March, 2019. Michael Vi/Shutterstock
- Canadian customers who have no funds in their Paxos accounts will have their accounts automatically closed on 9 May, while the rest will be disabled on 2 June.
- Paxos is not the only company to be leaving Canada, with cryptocurrency exchanges dYdX and OKX saying they will wind down their businesses in the country due to “new regulations”.
- Both crypto exchange Coinbase and stablecoin issuer Paxos have stated that they will no longer accept or initiate U.S. dollar payments through Silvergate Bank.
- The two noted that cash transactions for institutional clients will now be carried out through their other banking partners, and that the move had no impact on pound and euro payments.