Paypal's crypto ambitions: connecting cryptocurrencies to the global market

PayPal Holdings Inc will announce later on Tuesday that it will allow U.S. consumers to use their cryptocurrencies to pay at its millions of online merchants around the world.

President and CEO Dan Schulman said, "For the first time, you can use cryptocurrency seamlessly in your PayPal wallet in the same way as a credit or debit card. We see this as a transition point, a transformation of crypto tokens from assets to becoming legal tender for millions of merchants to conduct transactions in the real world." Continued volatility has been the main reason why Bitcoin has not become a widespread form of payment, and PayPal hopes its new business will change this situation because by settling transactions in fiat currency, merchants will not bear volatility risk. Customers who hold Bitcoin, Ethereum, Bitcoin Cash and Litecoin in PayPal digital wallets can now convert their holdings into fiat currency at checkout to make purchases. The business will be available to its 29 million merchants in the coming months.

With 29 million online merchants and nearly 300 million users worldwide, Paypal has shown its ambition to occupy the crypto payment market since the Libra era. However, due to regulatory issues, Libra was defeated and Paypal also announced its withdrawal from its supervisory alliance. Although the project failed, Paypal's strategic plan has never been shelved. It has always believed that it can eventually bring more than one billion "unbanked" people into the financial system.

At the end of 2020, Paypal opened its newly launched cryptocurrency service to all eligible US users. At that time, the market value of Bitcoin was close to $300 billion, making it the 20th largest asset by market value, followed by the famous US home improvement retailer Home Depot and telecommunications giant Verizon. PayPal ranked only 29th. In an interview, PayPal President and CEO Dan Schulman said that the company hopes that this service will encourage the use of virtual currencies around the world and prepare its network to support new digital currencies that may be developed by central banks and companies.

The business was highly sought after as soon as it was launched. According to a report by Pantera Capital, a cryptocurrency investment company at the time, Bitcoin experienced a long supply shortage in November 2020, causing prices to soar, and most of the newly minted Bitcoins were bought by PayPal users. PayPal's new business had a huge impact at the time. Pantera cited BitBit data as saying: "When PayPal launched its new encryption service, transaction volume began to explode. Within four weeks of going online, PayPal had purchased nearly 70% of new Bitcoins."

Paypal has also been making frequent moves recently. According to BitPush, Paypal confirmed the acquisition of cryptocurrency custody company Curv in early March. This acquisition is considered to be part of its initiative to support cryptocurrencies and digital assets.

As an industry giant that has experienced the tragedy of Libra's demise, Paypal has also positioned itself very clearly. Its CEO Dan Schulman said at an investor meeting that he hopes PayPal's digital wallet will become a way for central banks to distribute CBDC to consumers of different income levels.

In the long run, if the crypto market wants to truly "break out of the circle", hot news may bring a short-term boom, but it will not be sustainable. Only through large-scale applications and integration with everyone's life can it complete its true transformation from asset to currency.