PayPal was rumored to be considering listing crypto assets on its platform, and if PayPal dabbling in crypto could make Bitcoin (BTC) a mainstream payment option.
Two steps forward, one step back
PayPal started to take baby steps toward crypto back in 2013. A few months later, John Donahoe, CEO of Ebay - parent company PayPal, confirmed that the payment platform will have to integrate Bitcoin (BTC) and cooperate with three payment processors in the space by September 2014: BitPay, Coinbase and GoCoin.
In July 2015, PayPal began to separate from Ebay to become a separate public company. Donahoe takes over as chairman of the payment platform, Dan Schulman becomes CEO of PayPal. Schulman's view on cryptocurrencies is mixed and may drop even more than Donahoe, who revealed that he owns Bitcoin, but finds cryptocurrencies too volatile to be a convenient medium of exchange in traditional commerce.
At the start of 2016, PayPal appointed Wences Casares — CEO and founder of Bitcoin wallet Xapo — to its Board of Directors, adding some crypto talent to its roster. In April 2019, the payments giant backed a blockchain startup for the first time, investing an undisclosed amount into Cambridge Blockchain — a fintech firm aiming to leverage the technology to empower users with more control over their digital identities.
However, in May that year, chief financial officer of PayPal John Rainey distanced the company from crypto, saying that it’s still “a little early on” to enter the sector. However, just one month later, PayPal was revealed as one of the founding members of the Libra Association — a not-for-profit, Switzerland-based consortium behind the Libra stablecoin — but left the organization soon after due to regulatory backlash.
As PayPal’s chief technical officer Sri Shivananda said, crypto developers must follow consumers in order to succeed. “If consumers start to feel like there’s some leverage that they get through cryptocurrencies, everything else will automatically fall in line,” he said.
➤ Summary of quarter II of 2020: Bitcoin investors pocketed 42% of profits
“PayPal does not comment on rumors or speculation”
On June 22, it was reported that Paypal was considering introducing a direct sale of cryptocurrency assets through PayPal and Venmo, citing three people familiar with the matter. According to CoinDesk sources, PayPal may be working with multiple exchanges to provide liquidity. It is also said to have plans to provide a monitoring service, providing users with their cryptocurrency storage with PayPal digital wallet.
When asked to confirm or deny that information, a PayPal representative told Cointelegraph that “PayPal does not comment on rumors or speculation.” Nevertheless, PayPal’s job listings, posted around the same time, made the rumors somewhat more credible. PayPal advertised for a “crypto engineer” — a person responsible for “new initiatives for PayPal global with a focus on agility, time-to-market and innovation” as well as a blockchain research engineer to work within the company’s newly formed research group.
However, in its latest 10-K form filed with the United States Securities and Exchange Commission in December 2019, PayPal mentioned potential “rapid” developments in blockchain and virtual currencies as a possible risk factor that may negatively affect the company.
Mass adoption and market demand
The most obvious implication of PayPal’s rumored expansion is adoption — if a financial service with 325 million active users starts listing digital assets, it is likely to make crypto more viable in the eyes of the financial mainstream. Mashinsky argued that it will consequently drive the price of BTC and Ether (ETH) up significantly, “as the scarcity of the coins will play a big part when adoption comes.”
Jung told Cointelegraph that PayPal’s arrival might signal the start of crypto’s mainstream adoption and prompt the industry to become more consolidated, largely putting an end to altcoins as a class. He added, “This doesn’t necessarily mean that there will be fewer tokens, in fact, this will likely create a boom in the tokenization of assets and more robust crypto businesses.”
Finally, PayPal may benefit the crypto industry by serving as a bridge to connect crypto audience with traditional finance and onboard new users that have not experienced crypto before, TradeBlock’s Todaro suggested, adding: “In order to gain heightened adoption of digital currencies, there needs to be a bridge between traditional incumbents and these new decentralized crypto services, which we have been seeing.”
Source: Cointelegraph
