PayPal introduces Cryptocurrencies Hub feature
PayPal has introduced an update to its terms and conditions, unveiling the Cryptocurrencies Hub feature. This new offering enables users to hold and engage with Bitcoin (BTC) and other cryptocurrencies directly within their PayPal accounts.
The revised terms and conditions lay out the prerequisites for individuals seeking to access the platform for cryptocurrency-related activities. The new service, as described by PayPal, facilitates the buying and selling of crypto assets and aims to streamline the process of utilizing funds obtained from crypto sales to execute payments via PayPal.
Under the hood, PayPal leverages the expertise of stablecoin issuer Paxos Trust and other authorized providers to offer some integral custody, trading, and transfer services. Accessing the Cryptocurrencies Hub is contingent upon users possessing a personal PayPal account and a “well-maintained balance account,” along with the fulfillment of required identity verification procedures. The press release further notes that the new feature is currently not available for residents of Hawaii.
The Cryptocurrencies Hub assumes a crucial role in the conversion between the PayPal-backed stablecoin, PayPal USD (PYUSD), and other cryptocurrencies. The payment giant clarified that while the balance in the hub represents ownership of each crypto asset’s value, actual possession of the underlying coins does not occur within the balance.
For those allowed to establish the Cryptocurrencies Hub, a range of functionalities becomes accessible, including the ability to maintain their crypto balance, engage in buying, selling, receiving, and sending crypto assets. They will also be able to conduct transactions where the proceeds from crypto sales are directed towards PayPal payments or conversion between PYUSD and other coins.
Last week, Democratic Congresswoman Maxine Waters criticized PayPal’s recent entry into the dollar-pegged stablecoin market, arguing that the company should have awaited federal regulatory approval before launching its stablecoin.
As the top Democrat on the House Financial Services Committee (HFSC), Waters expressed concerns over PayPal’s decision to introduce a stablecoin, saying that there is currently no established federal framework for regulating such assets.
Waters added that the lack of federal regulation poses risks for stablecoins. She highlighted the need for proper oversight, enforcement, and regulatory measures for these assets to ensure consumer protection and financial stability.
PayPal’s stablecoin is fully backed by liquid assets like U.S. dollar deposits, short-term U.S. Treasurys, and cash equivalents, ensuring stability and redeemability at a 1-to-1 ratio with U.S. dollars. As an ERC-20 token issued on the Ethereum blockchain, it will allow customers to transfer the stablecoin between digital wallets. PayPal USD will be available to consumers, merchants and developers to make person-to-person payments, fund purchases at checkouts, and convert supported cryptocurrencies to and from PayPal USD.