London (Reuters) – PayPal Holdings Inc PYPL.O On Wednesday, it said it would allow customers to place bitcoin and other virtual coins in their online wallet and use cryptocurrency on 26 million merchants on the network.
The new service makes PayPal one of the largest US companies offering consumers access to cryptocurrency, which could help in the widespread adoption of bitcoin and rival cryptocurrencies as viable payment methods.
The San Jose, California-based company hopes the service will encourage global use of virtual coins and build its network for new digital currencies that can develop central banks and companies, an interview by President and Chief Executive Officer Dan Shulman said in.
“We’re working with central banks and thinking about all types of digital currencies and how PayPal can play a role,” he said.
The company said that US account holders will be able to buy, sell and sell cryptocurrencies in their PayPal purse in the coming weeks. PayPal plans to expand the service in the first half of 2021 to its peer-to-peer payment app Venmo and some other countries.
The company said that the ability to pay with cryptocurrency will be available from early next year.
Other mainstream fintech companies, such as mobile payment provider Square Inc. SQ.N And the stock trading app firm Robinhood Markets Inc. allows users to buy and sell cryptocurrencies, but its size has been noted by the launch of PayPal.
The company has 346 million active accounts worldwide and paid $ 222 billion in the second quarter.
PayPal shares were up 4% at 1418 GMT, set for its best day in a month.
Bitcoin BTC = BTSP According to the news, it was the worst hit since July 2019. It was 4.8% last at $ 12,494, above 75% for the year, leveraging for the original and largest cryptocurrency. The cryptocurrency market players said that the size of PayPal would mean a move towards bitcoin prices. “The price impact will be positive overall,” said Joseph Edwards of Enigma Securities, a cryptocurrency brokerage in London. “There is no comparison in relation to the potential risk with the PayPal offering, and it is the opposite with any previous offering.”
Bitcoin and other virtual coins continue to struggle to become a widespread form of payment, despite being in place for over a decade. The volatility of cryptocurrencies is attractive to speculators, but is a risk for traders and shopkeepers. Transactions are also slower and more expensive than other mainstream payment systems.
PayPal believes that its new system will address these issues because payments will be settled using traditional currencies, such as the US dollar. This means that PayPal will manage the risk of price fluctuations and traders will receive payment in virtual coins.
“We’re going about it in a fundamentally different way to provide the maximum amount of protection for our merchants,” Showman said.
Some central banks, led by Facebook, announced PayPal’s service, announcing plans to develop digital versions of their currencies. FB.O Cryptocurrency Project Libra in 2019, met with strong regulatory pushback ..
Paypal was one of the founding members of the project, but dropped out after a few months.
PayPal has received the first conditional cryptocurrency license from the New York State Department of Financial Services. The company will initially allow the purchase of Bitcoin and other cryptocurrencies called Ethereum ETH = BTSP, Bitcoin cash BCH = BTSP And bitcoin LTC = BTSP, It said.
PayPal is teaming up with cryptocurrency firm Paxos Trust Company to provide the service.
Reporting by Anna Erera and Tom Wilson in London. Editing by Richard Chang and Jane Merriman