British customers of PayPal can buy, hold and also sell various cryptocurrencies starting this week. However, payments via the online service can still only be processed in the conventional way.
Buying and selling in Great Britain should be possible from one British pound upwards. Well-known currencies such as Bitcoin, Bitcoin Cash, Ethereum or Litecoin are available for this. However, it is not yet possible to pay for goods and services using the selected cryptocurrency; in this case, the usual currency has to be sold again and the amount due must be paid with the resulting credit. Offline storage is also not possible, the currency remains in the PayPal system. In addition, users can track crypto prices in real time and find information about the market.
Jose Fernandez da Ponte, General Manager for Blockchain, Crypto and Digital Currencies at Paypal, told CNBC yesterday that he expected a similar development in Great Britain due to the good acceptance of the new service in the USA. In the United States, PayPal customers have been able to purchase various crypto currencies since October 2020.
Skepticism and acceptance
As in the US, PayPal relies on the services of Paxos, a New York-based digital currency company, to process crypto buying and selling in the UK. PayPal also claims to be working with UK regulators to make the service possible. The procedure seems understandable, as many supervisory authorities are still suspicious of the rise of digital currencies. Last June, the FCA banned the establishment of a British subsidiary of the world's largest crypto exchange Binance on the grounds that the company did not meet the requirements for preventing money laundering. For PayPal, however, this does not seem to be a contradiction, on the contrary: For the company, it makes perfect sense that regulators should pay more attention to this area, as consumer interest and volume are increasing, according to the financial services provider.
Continuous fluctuations
The payment service is one of many large service providers that have made the move so far mostly unregulated world of cryptocurrencies. Even if there are still many concerns about price volatility, consumer protection and potential money laundering, large companies such as Facebook, Mastercard or Tesla are becoming more and more open to cryptocurrencies.
The fact that the concerns are justified can be seen in the past few weeks alone: In April of this year, Bitcoin, the largest digital currency in the world to date, reached a new record high of almost 65,000 US dollars. However, when Chinese authorities stepped up their crackdown on cryptocurrency mining in the country in July, the price fell to below $ 30,000, but has now recovered to over $ 50,000.
On the other hand, various countries are stepping up their efforts for cryptocurrencies, which in turn could ensure greater acceptance. El Salvador wants to recognize Bitcoin as official legal tender and thus promote its economic upswing, Sweden, on the other hand, started a first practical test with the “E-Krone” at the end of May 2021 and the European Union is also considering a “digital euro”.
First steps, more to follow
According to PayPal, its foray into the crypto market is primarily about making it easier for a large number of people to participate in the market. “The tokens and coins have been around for a while, but you had to be a relatively sophisticated user to access them, says Da Ponte. Now having a platform like PayPal's is “a really good entry point” for him. The takeover of the Tel Aviv-based security company Curv, which wants to protect its customers' digital assets through an innovative cryptography method, also contributes to this.
The current step should be just another of many that follow. According to da Ponte, PayPal has the ambition to bring the new services to other countries after the USA and Great Britain. “We consciously start with the first functions and then see where the market leads us.”.