PayPal to enable crypto purchases with the help of Paxos

Startups • October 21, 2020, 7:42AM EDT
UPDATED: October 21, 2020, 2:44PM EDT
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Quick Take

  • PayPal will allow users to hold and buy crypto in the coming weeks
  • It will bring the services to its social payments platform Venmo next year
  • The firms are partnering with Paxos to obtain a conditional license from the New York Department of Financial Services.

Payments giant PayPal and its social payments platform Venmo are set to offer crypto buying and selling, people familiar with the matter said.

Crypto will solely be offered on PayPal to start, with Venmo slated to follow in 2021, the people said. PayPal has obtained a conditional license from the New York Department of Financial Services (NYDFS), allowing the firm to offer crypto buying and selling. The news was first reported by Reuters.

A conditional license allows a new firm to be compliant through collaboration with an authorized licensee, with the expectation that the new firm will eventually seek its own. For its part, PayPal is collaborating with Paxos.  

Paxos' recently launched API-based brokerage service Paxos Crypto Brokerage will handle the regulatory, technological and liquidity aspects of the crypto features. It touts those services for fintech firms, freeing clients up to focus solely on front-end experiences. 

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PayPal's president and chief executive Dan Schulman told Reuters in an interview that the goal is also to encourage global adoption of cryptocurrencies and prepares for potential offerings of central bank digital currencies in the future. “We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,” he was quoted as saying.

In a statement, PayPal said that users will be able to spend crypto across its network of 26 million merchants beginning in 2021. 

Rumblings of PayPal's crypto plans began in June, when a report from CoinDesk indicated the firm and its subsidiary Venmo had plans to enable digital asset purchases. At that time, a PayPal representative said the firm "does not comment on rumors or speculation."


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About Authors

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.
Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].