PayPal announces that it has been granted a conditional Bitlicense, the first of its kind, by the New York State Department of Financial Services. The new license will allow PayPal users to buy, sell, and hold cryptocurrencies using the PayPal digital wallet. Initially, the cryptocurrencies accepted on PayPal are Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
PayPal said there wouldn’t be any fee for holding cryptocurrency in a PayPal account. However, charges for buying or selling cryptocurrency will be applicable after 31st December 2020.
PayPal said in its official press release that “Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with the certainty of value and no incremental fees. PayPal merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates.
Backlash towards PayPal’s Bitcoin
PayPal’s news has seen criticism as officials from Satoshi Labs and Ripple have spoken against the idea. Blockchain technology aims to offer decentralized services to its users, whereas Paypal is taking away that luxury by not providing the key to coins to the users. Another reason for the argument is that a former PayPal official once called Bitcoin a scam.
Satoshi Labs responded through a blog post: Why you should not use Paypal for Bitcoin, “Until very recently, PayPal was anti-crypto. Writing in 2018, ex-CEO Bill Harris called Bitcoin ‘the greatest scam ever,’ so what’s changed? When a household brand like PayPal starts selling Bitcoin, it’s probably not because they want to spur healthy adoption. If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency. Time after time, exchanges have lost user funds, often leaving them with no recourse.”
Brad Garlinghouse, the CEO of ripple, who’s XRP token is not on the list for PayPal’s selected coins to trade, tweeted, “2 steps forward, 1 step back…Great to see a payment pioneer leaning in, BUT disappointing some fundamental tenets/benefits of crypto are spurned. I suspect PayPal is concerned about the (wait for it…) regulatory uncertainty, impacting its roll-out on a number of levels.”
PayPal’s main reason for facing backlash is because it kills the idea of decentralization by not providing users the private key.
What’s expected of PayPal’s Bitcoin acceptance?
According to a survey conducted by Cornerstone Advisors and FICO, 60% of smartphone users have the PayPal app installed, while 14% of them already own some sort of cryptocurrency. At the same time, another 15% of smartphone users intend to invest in cryptocurrencies. These numbers show that PayPal can have a promising online future in this service.
Featured image: PayPal