Jun 7, 2022 - Economy

PayPal finally enables cryptocurrency withdrawals

Illustration: Aïda Amer/Axios

There's a major new way for regular people to move between normal money and cryptocurrency, and it's via an app that many have likely been using for years: PayPal.

Why it matters: In a long-awaited announcement, PayPal, which claims over 400 million users, is giving them the option to take full control of crypto that they buy on the app. Now that withdrawals are enabled, the company becomes a piece of the infrastructure of the crypto economy.

  • They can also use PayPal to sell crypto they have been sitting on.

The big picture: PayPal is a very familiar app that many people are very comfortable with, one that will now let them move crypto off its servers and onto a wallet that only the user controls.

  • Cryptocurrency's great promise is to give people — when and if they want it — complete control of their money in a digital form.

Flashback: PayPal entered the crypto world in October 2020, when it announced it would support buying and selling bitcoin, ether, bitcoin cash and litecoin.

  • Yes, but: Without enabling withdrawals, it wasn't much more than a cryptocurrency video game, one where people could make bets on when one of these cryptocurrencies might go up in value.

What they're saying: "We will continue to roll out additional crypto features, products and services in the months ahead," PayPal's Jose Fernandez da Ponte said in the announcement of the new features, shared with Axios in advance.

In the weeds: PayPal has a few other features that might be useful for the avid crypto user.

  • Sending any of its four cryptocurrencies to any PayPal user is free. So while a transaction always costs a fee on a blockchain, if the person a user is trading with has PayPal, they can do it instantly and without cost.
  • PayPal was always open to buying back the crypto its users bought. By enabling deposits, PayPal opens itself to become another place for retail holders to get out of crypto positions as needed.

Of note: Cash App, from the company that makes the Square point-of-sale system, pioneered crypto in payments apps in 2018, but only for bitcoin.

What we're watching: When will Venmo enable the same functionality? Venmo, the payments app popular with millennials and Gen Z, is owned by PayPal. It didn't enable buying cryptocurrencies until six months after PayPal did though.

The bottom line: "We believe that we play an important role in bringing increased access and utility to the digital currency space and that digital currencies will play a crucial role in the future of commerce," da Ponte tells Axios.

(Crystal Kim contributed reporting)

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