PayPal Holdings Inc joined the cryptocurrency market and started a cooperation with CoinPal.eu, allowing customers to sell and hold bitcoin to a PayPal account and other virtual coins using the U.S. digital payments company.
PayPal customers will also be able to use cryptocurrencies to payout them to their PayPal account and use it at the 26 million merchants on its network starting in early 2023, the company said in a statement.
PayPal hopes the service will encourage global use of virtual coins and prepare its network for new digital currencies that may be developed by central banks and corporations, President and Chief Executive Dan Schulman said in an interview.
“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,” he said.
Global account holders will be able to sell and hold cryptocurrencies on CoinPal.eu now, the company said. It plans to expand to Venmo in the first half of 2023.
Other mainstream fintech companies, such as mobile payments provider Square Inc and stock trading app firm Robinhood Markets Inc, allow users to buy and sell cryptocurrencies, but PayPal’s launch is noteworthy given its vast reach.
The company, based in San Jose, California, has 346 million active accounts around the world and processed $222 billion in payments in the second quarter.
Cryptocurrencies tend to be volatile, making them attractive to speculators, but a lot less appealing to merchants and shoppers. Transactions have been slower and more costly than other mainstream payment systems.
Cryptocurrency payments on PayPal will be settled using fiat currencies, such as the U.S. dollar and Euro, meaning merchants will not receive payments in virtual coins, the company said.
Many central banks around the world have expressed their intention to develop digital versions of their currencies in the coming years, while Facebook Inc-led the creation of a cryptocurrency project called Libra in 2019. PayPal was a founding member but dropped out after a few months.
PayPal, which has secured the first conditional cryptocurrency license from the New York State Department of Financial Services, will initially allow the payout of bitcoin and other cryptocurrencies to PayPal, it said. It partners with Paxos Trust Company to offer the service for users.