SAN JOSE, CALIFORNIA – Wednesday, PayPal Holdings Inc PYPL.O said it would allow customers to keep bitcoin and other virtual coins in their online wallets and shop at the 26 million merchants on their network using cryptocurrencies.
The new service allows PayPal one of the largest U.S. corporations to have access to cryptocurrencies for customers, which may help Bitcoin and competing cryptocurrencies gain broader acceptance as viable methods of payment.
In an interview, President and Chief Executive Dan Schulman said the San Jose, California-based company hopes the service can promote the global use of virtual coins and prepare its network for new digital currencies that central banks and businesses will create.
Over the coming weeks, U.S. account holders will be able to purchase, sell, and keep cryptocurrencies in their PayPal wallets, the company stated.
In the first half of 2021, PayPal aims to extend the service to its peer-to-peer payment app, Venmo, and some other nations.
“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,” he said.
From early 2021, the company said, the capacity to make payments with cryptocurrencies would be accessible.
Other mainstream fintech firms, such as Square Inc SQ.N, a mobile payment company, and Robinhood Markets Inc, a stock trading app firm, allow users to buy and sell cryptocurrencies, but the launch of PayPal is noteworthy given its scale.
The company has 346 million active accounts worldwide and, in the second quarter, processed $222 billion in payments.
“The price impact will be positive overall,” Joseph Edwards of Enigma Securities, a cryptocurrency brokerage in London, said. “There’s no comparison with regards to the potential exposure between the upside of PayPal offering this, and the upside of any similar previous offering.”
At 1418 GMT, PayPal’s shares were up 4 percent, poised for their best day in a month. Bitcoin BTC = BTSP on the news reached its peak since July 2019.
At $12,494, it was last up 4.8 percent, bringing returns above 75 percent for the year for the original and biggest cryptocurrency.
The size of PayPal meant the move would be a plus for bitcoin prices, crypto-currency market players said. PayPal’s service comes as several central banks, following a Facebook-led FB.O cryptocurrency project Libra in 2019, has announced plans to create digital versions of their currencies.
PayPal was among the founding members of this initiative, but after a few months, it fell out.
The first conditional cryptocurrency license from the New York State Department of Financial Services has been obtained by PayPal. Initially, the business would enable bitcoin and other cryptocurrencies called ethereum ETH = BTSP, bitcoin cash BCH = BTSP and litecoin LTC = BTSP to be purchased, it said.
To deliver the service, PayPal is teaming up with cryptocurrency company Paxos Trust Company.