Payment processing platform PayPal will expand its cryptocurrency-trading service to the UK just as Blighty’s regulators are clamping down on digital money. Paypal’s service will enable users to sell, buy and hold cryptocurrencies, but only in the app.
The company launched the service in the US earlier in the year amidst the bitcoin-buying frenzy. The launch was interpreted as a major endorsement of digital currencies. Other payment processing leaders such as Mastercard have also announced plans to start to provide cryptocurrency services.
Bitcoin reached a price of $64,863 on April 14 just as Coinbase went public. The price of the cryptocurrency fell dramatically during the summer to a $29,608 low on July 21, but has recovered in recent weeks. It is currently trading at $50,379.
Part of the recent bitcoin slump has been attributed to regulators around the world stating that they will regulate cryptocurrencies more strictly in the future. The head to the Securities and Exchange Commission, the People’s Bank of China and the UK’s Financial Conduct Authority (FCA) have all made it clear that an end to the Wild West of crypto-trading is coming.
The FCA backed up its words with actions in July by issuing a warning against cryptocurrency exchange Binance, which led to the exchange’s UK subsidiary Binance Markets Limited not being permitted to undertake any regulated activity in the UK, such as offering cryptoasset derivatives or securities.
It is against this background that PayPal is now launching its cryptocurrency service in the UK. It will roll out the service this week.
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PayPal is clearly aware of the environment it is dipping its toes into. While boasting that customers can choose from four types of cryptocurrencies – bitcoin, ethereum, litecoin and bitcoin cash – to trade with, the fintech also repeatedly reminded its users that cryptocurrencies are still extremely volatile. The app also provides a plethora of educational material to inform customers about the risks of trading in digital money.
“We are committed to continue working closely with regulators in the UK, and around the world, to offer our support – and meaningfully contribute to shaping the role digital currencies will play in the future of global finance and commerce,” said Jose Fernandez da Ponte, vice president and general manager of blockchain, crypto and digital currencies at PayPal.
As noted by CNBC, PayPal users can’t move their crypto holdings outside the app. That’s similar to the way challenger bank Revolut’s crypto offering works, although the neobank recently started testing a feature that lets users withdraw bitcoin to their own personal wallets.
This is PayPal’s first international expansion of its cryptocurrency service outside of the US, but da Ponte noted that it ties into the wider trend of people forgoing physical money for digital.
“The pandemic has accelerated digital change and innovation across all aspects of our lives – including the digitisation of money and greater consumer adoption of digital financial services,” said da Ponte.
“Our global reach, digital payments expertise, and knowledge of consumer and businesses, combined with rigorous security and compliance controls provides us the unique opportunity, and the responsibility, to help people in the UK to explore cryptocurrency.”