The New Year will start with a bang for cryptocurrency as PayPal announces the launch of customer capabilities to pay merchants using digital coin. It’s a huge deal for crypto, and a huge deal for bitcoin especially, which saw prices today soar well beyond that resistance spot of $12,000 and closing in on $12,800 by midday.
The big news is that PayPal has secured the first conditional cryptocurrency license from the New York State Department of Financial Services. This is the first time an entity has been approved for a conditional Bitlicense in New York State.
The license will enable PayPal’s 346,000,000 users to buy, hold and sell cryptocurrency directly from their PayPal account.
They’ll also be able to use bitcoin, ethereum, bitcoin cash and litecoin to shop. That means they can use it with 26 million merchants worldwide.
In a blog statement, the company said that consumers would be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. In other words, it won’t cost consumers or merchants.
"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,” PayPal said.
No one should be surprised, really. We expected this from PayPal.
Back in 2018, PayPal indicated it was getting ready for this crypto leap when it filed a patent with the U.S. Patent and Trademark Office (USPTO) for a product designed to increase cryptocurrency payment speed using secondary private keys to reduce transaction wait times between consumers and merchants.
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To that end, last year, PayPal invested in TRM Labs, a cryptocurrency risk management platform, as well as Cambridge Blockchain, a blockchain-based identity management and compliance software company.
PayPal has always been a crypto believer, with President and CEO Dan Schulman calling the digital shift “inevitable”.
So, it’s been a great day for crypto--so far. Whether it can sustain that near $12,800 is another story. But already this year, and specifically since the start of the global pandemic, bitcoin has gained more than 70%.
The pandemic has given it a bump because it’s prompted wider acceptance of digital payments by the mainstream financial community.
And institutional investments in bitcoin have been soaring.
Earlier this month, Square, PayPal’s main U.S. rival, revealed that it had purchased 4,709 bitcoins, worth approximately $50 million. It may represent only about 1% of Square’s total assets, but the symbolism is huge.
“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose,” the company said in a release.
In August, business analytics firm MicroStrategy announced that it had become the first Nasdaq-listed company to adopt bitcoin as a primary treasury reserve asset - using as much as $250 million of its cash pile to invest in bitcoin. Following month, the company purchased 16,796 additional bitcoins at an aggregate purchase price of $175 million.
Also in August, Fidelity Investments, one of the largest mutual fund firms in the US, announced plans to launch its first Bitcoin fund.
By Michael Kern for Safehaven.com
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