PayPal announced a new feature on Wednesday that will allow users to buy, hold and sell cryptocurrencies. Soon, PayPal users will be able to transfer funds to their external digital wallets.
The company stated in a press release that its new cryptocurrency service will be launched in the U.S. in the coming weeks and will initially include Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. The company also plans to allow customers to use cryptocurrency to shop through its 26 million retailer network by early 2021.
In early trading in New York, PayPal’s stock price rose by more than 3%.
Central banks around the world have been exploring the idea of issuing their digital currencies. The seven largest central banks in the world recently developed a framework for the operation of this system. At the same time, the People’s Bank of China has been trying to establish its own proposed digital currency.
How does PayPal activate the feature?
To activate the feature, PayPal said it has partnered with cryptocurrency startup Paxos. The company added that it had obtained a conditional virtual currency license from the New York State regulator. PayPal will introduce encryption to its Venmo mobile wallet and the international market in the first half of 2021.
At the time of the announcement, more financial institutions signaled to enter the emerging cryptocurrency market.
Other giant companies also start providing crypto services.
Twitter CEO Jack Dorsey’s financial technology company Square has long provided cryptocurrency services
The company has recently purchased $50 million in Bitcoin, and investment manager Fidelity established its crypto department last year.
It also highlights the company’s efforts to provide cryptographic use cases other than speculative transactions, such as e-commerce and payments. Bitcoin and other cryptocurrencies are unpredictable in their price volatility. Bitcoin climbed to nearly $20,000 at the end of 2017 and then plummeted the following year.
Elsewhere in this field, Facebook and many other technology companies collaborate to develop a digital currency called Libra. They hope it will enable cheaper and faster cross-border payments. The policymakers were all categorically opposing the last year’s project. Its supporters had to change the current model to appease regulators.
How do Paypal cryptocurrency transactions operate?
According to Paypal, it will be sold first whenever you check out with cryptocurrency since it is an asset. The cash will be used to pay the merchant. Users must report any gains or losses generated by your crypto exchange. When you sell cryptocurrency, PayPal will provide the necessary 1099 form.