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"The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly," Paypal president and CEO Dan Schulman said in a press release Wednesday. “Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.”
Schulman added that PayPal is “eager to work with central banks and regulators around the world” in supporting cryptocurrency
The service will initially feature Bitcoin, Ethereum, Bitcoin Cash and Litecoin directly within PayPal's digital wallet, and will be available to the company's U.S. accountholders in the coming weeks. Paypal will also expand the feature to Venmo and select international markets in the first half of 2021, making cryptocurrency an available funding source to the company's 26 million merchants worldwide.
Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. Meanwhile, PayPal merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates.
In addition, PayPal will offer educational content through a "Bitlicense" with New York State's Department of Financial Services to help consumers understand "the cryptocurrency ecosystem, the risks and opportunities related to investing in cryptocurrency, and information on blockchain technology."
According to the company, there are no service fees when buying or selling cryptocurrency through December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account.
PayPal's move to bring cryptocurrency into the mainstream comes amid concerns about its volatility, cost and transaction speed. It also comes on the heels of competitor Square, which announced earlier this month that it would make a $50 million investment to purchase approximately 4,709 bitcoins.
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Paypal stock surged more than 5% on the announcement Wednesday, while Bitcoin soared to its highest price since July 2019, up more than 4%.