I think that Paypal is trying to achieve the first mover advantage in the cryptocurrency market. This is the real reason for their shopping spree, and the word is around that they are trying to buy the cryptocurrency custodian firm BitGo, and in doing this they will have the control over the crypto HODL, as they started the week with a press release about how people in US will have the option to buy, sell and hold crypto in their Paypal account (they started with BTC, BCH, ETH and LTC first, but there are some rumours about a future collaboration with Paxos - they are partners on a conditional licence at New York department of Financial Services). There are hints of bringing Venmo as a service provider in 2021. Even if they did not say that we can transfer out crypto from Paypal to any other account (which disappointed me a bit) , BitGo is providing qualified and self-managed custody, trading and lending at the moment. BitGo also provides a portfolio management service.
There will be some interesting ripples into the crypto-market, as Paypal will probably be a direct competitor to Coinbase, but also Paypal has a long history of playing it cool with the authorities, so i think you will need to pay tax on all the profit made from cryptocurrencies. There are well known names such as Nexo, Coinjar, Zcash and Blockchain Capital using BitGo services at the moment, along many others. If case you don't know yet, Paypal already bought in 2019 Cambridge Blockchain (a digital identity provider) and TRM Labs (a company aiming to help financial institutions fight money laundering, prevent fraud, and stay in compliance).
To quote Dan Schulman, president and chief executive of PayPal:
“The shift to digital forms of currencies is inevitable. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
And then, there is the other aspect, will they provide any interest on the cryptocurrency you hold in your Paypal account or not? This is bringing a huge advantage, even when the interest rates are not as big as Celsius and Blockfi, for example. (I am not mentioning CryptoCom on purpose, as they seems to fail to understand the market at the moment, with the native cryptocurrency CRO losing more than third of its value in the last 10 days.).
Definitely the year 2021 will be an interesting one, and i believe that Paypal will open the gates to the other Big Tech corporations, as they will need to adapt or to be left behind. Not that they are hiding in a corner looking in awe at Paypal. Google just started an initiative partnering with Chainlink, to use its oracles in order to integrate more cryptocurrency data. Amazon itself had registered three domain names related to the blockchain and cryptocurrency all the way back in November 2017, and they are known to use already their own blockchain service for scalable blockchain networks. They are blockchain supporters, even if Jeff Bezos did not disclosed yet if he is pro or against cryptocurrency.
What will be next? I am as curious as you to find out.
Yours truly,
G.
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