PayPal Embraces Crypto: Allows Buying and Selling
October 15, 2020 – In a landmark announcement that could reshape the digital payments landscape, PayPal has officially entered the cryptocurrency market, allowing U.S. users to buy, sell, and hold crypto assets directly from their PayPal accounts.
This move represents one of the most significant endorsements of cryptocurrency by a major financial platform to date, signaling growing institutional and mainstream acceptance of digital assets like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).
The feature is set to roll out to all eligible users in the U.S. by November, with plans to expand to international markets and allow crypto payments at checkout in early 2021.
What PayPal Is Offering
With over 346 million active accounts and 26 million merchants, PayPal’s entrance into the crypto space provides unprecedented exposure for digital currencies. The core features announced include:
-
Buying and selling of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash
-
Holding crypto in a PayPal digital wallet, custodially managed
-
Real-time market data and educational content on crypto
-
Crypto checkout (starting 2021): Use crypto to pay at PayPal merchants (converted into fiat at point of sale)
PayPal’s crypto custody and trading services are being powered by Paxos Trust Company, a regulated provider that also works with platforms like Revolut and Binance.
Why This Is a Big Deal
1. Massive User Base
PayPal’s sheer scale brings crypto exposure to tens of millions of everyday users who might never have considered using Coinbase or Binance.
2. Regulatory Clarity
PayPal has secured a conditional BitLicense from the New York State Department of Financial Services (NYDFS) — a stamp of approval in one of the world’s toughest crypto jurisdictions.
3. User-Friendly Onboarding
By integrating crypto into its existing platform, PayPal removes barriers like private key management, external exchanges, and complex wallets — making crypto more accessible to the average person.
Market Reaction: Bitcoin Surges
Within 24 hours of the announcement, Bitcoin’s price jumped over 7%, pushing it above $12,000 for the first time in over a month. Ethereum and other supported coins also posted significant gains.
Many analysts believe this move validates crypto’s role as a legitimate asset class, especially when coming from a payment giant that once avoided digital currencies entirely.
PayPal’s CEO, Dan Schulman, stated:
“The shift to digital forms of currencies is inevitable… We are eager to work with central banks and regulators around the world to offer support.”
Limitations and Criticisms
Despite the positive headlines, PayPal’s crypto service has notable limitations at launch:
No Crypto Withdrawals or Deposits
Users cannot withdraw crypto to external wallets or send it to other users. This goes against the open ethos of blockchain technology.
Custodial Model
PayPal holds users’ crypto on their behalf. There’s no access to private keys, and the crypto can’t be moved off-platform — similar to a closed-loop investment product.
Checkout Only Converts to Fiat
Although crypto can be “used” at checkout starting in 2021, it is instantly converted to fiat, meaning merchants never actually receive crypto.
These choices are designed to maintain compliance, avoid volatility exposure, and ensure a smooth user experience — but they draw criticism from crypto purists who argue that “not your keys, not your coins” remains a valid concern.
PayPal’s Crypto Strategy: Adoption First, Innovation Later
PayPal appears to be taking a phased approach. The first goal is to onboard users and familiarize them with crypto assets. More advanced features like external wallet support, DeFi integration, or NFT interaction could follow — depending on user demand and regulatory clarity.
There are also signs that PayPal may be exploring deeper involvement in blockchain:
-
A recent job listing for a blockchain research engineer
-
Reports of talks with stablecoin issuers
-
Interest in central bank digital currencies (CBDCs)
This could mean that PayPal’s crypto push is more than just a market trend — it might be the foundation of a long-term digital finance strategy.
Competitors React
PayPal’s move puts pressure on other fintech platforms and traditional financial institutions.
-
Square, through its Cash App, already offers Bitcoin buying and selling. It has since announced a $50 million investment in BTC.
-
Robinhood also offers crypto trading but with similar custodial restrictions.
-
Visa and Mastercard are pursuing partnerships with crypto firms to enable stablecoin and token payments.
Meanwhile, banks are still largely watching from the sidelines — though several are now reportedly developing their own custody and trading services in response to PayPal’s entry.
Institutional Confidence on the Rise
The PayPal announcement caps off a string of institutional milestones in 2020:
-
MicroStrategy invested over $400 million in Bitcoin
-
Square put 1% of its treasury into BTC
-
Fidelity expanded its crypto services
-
Grayscale reported record inflows into its crypto trusts
With PayPal entering the fold, the narrative that Bitcoin is digital gold, Ethereum is the base layer of programmable money, and crypto is a mainstream asset class, has never been stronger.
What This Means for Retail Users
For everyday users, this update offers a frictionless entry point into the world of crypto:
-
You can buy Bitcoin with a few taps on your smartphone
-
No need to manage complex wallets or keys
-
Crypto exposure now sits next to your fiat PayPal balance
However, it’s crucial for users to understand the trade-offs: they are buying price exposure and investment opportunity, not full sovereignty over their assets.
Looking Ahead
The next few months will be key to evaluating the success of PayPal’s crypto initiative:
-
Will users actually engage with crypto, or just test it out?
-
Will PayPal enable withdrawals and transfers down the line?
-
How will regulators respond to growing fintech involvement in crypto?
Regardless of these open questions, the trend is clear: crypto is entering the financial mainstream, and PayPal has just added massive momentum to that movement.
Final Thoughts
PayPal’s entrance into the crypto space is arguably one of the biggest moments for digital assets in 2020. It validates crypto not just as a speculative tool but as a real financial option — with trusted infrastructure and regulatory backing.
While the initial offering is conservative, it marks the beginning of what could be a transformational journey for how consumers interact with digital money.
As the lines between traditional finance and blockchain continue to blur, PayPal is now positioned at the intersection — and millions of users are along for the ride.