PayPal has announced the expansion of cryptocurrency features, allowing users to send and receive funds to and from other wallets. Prior to today’s announcement, PayPal already allowed users to buy and sell bitcoin, Ethereum, Bitcoin Cash, and Litecoin from within its app, as well as use cryptocurrency to pay for various goods and services at checkout.
The new update means PayPal’s cryptocurrency wallet now has similar features to others. For example, users can now send funds from another wallet, such as Coinbase Wallet, to the PayPal app. Or they can transfer tokens from PayPal to a third-party wallet or exchange, fee-free, though network fees known as “gas” may apply, depending on the cryptocurrency.
In a blog postJosé Fernández da Ponte, senior vice president and general manager of blockchain and digital currencies at PayPal, said the new feature was one of the most common requests he has received from users.
“We are excited to connect PayPal customers with other wallets, exchanges, and apps, and will continue to roll out additional crypto features, products, and services in the coming months,” he wrote.
PayPal first added support for cryptocurrencies in October 2020. Initially, users could only buy, sell, and hold cryptocurrencies with PayPal. In March 2021, the company launched its Checkout with Crypto feature, allowing users to spend their crypto at millions of PayPal-enabled online merchants.
For now, the new feature will only be available to US customers, and for security reasons PayPal said it will implement additional identity checks for users before they are allowed to transfer any cryptocurrency. The feature will roll out in the US gradually, with select users getting access starting today and others being contacted in the coming weeks.
The PayPal wallet is known as an “escrow” application. It means that PayPal holds the “private keys” necessary to access the funds stored in your wallet, so the company could potentially freeze those coins and prevent users from accessing them if it had a reason to do so. That is different from non-custodial wallets, like Coinomi, where users own the private keys themselves.
PayPal always tries to promote its “custodian” nature as an advantage. That advantage, according to PayPal, is that users don’t have to worry about losing their private keys, while it promises to replenish any stolen funds in the event a customer’s account is hacked. With non-custodial wallets, there is no way to recover private keys if they are lost. Similarly, if a non-custodial wallet is hacked, there is no way for users to recover stolen funds.
Although Fernández da Ponte did not elaborate on additional new features that could appear in the coming months, he has previously said that the company is looking into developing its own stablecoin asset. Stablecoins are pegged to a stable reserve asset, such as the dollar or gold, to ensure that their value remains more or less stable, eliminating the volatility associated with traditional cryptocurrencies.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.