Rumors of PayPal’s potential entry into the world of crypto sent shockwaves through the industry this week.
According to a report from CoinDesk, which cites anonymous sources who say they’re familiar with the payment giant’s plans, PayPal is preparing to let its users buy, sell and store crypto assets in a matter of months.
So why would PayPal want to enter the space seemingly out of nowhere? The answer may be a recent eye-popping report from PayPal rival Square.
Square’s popular Cash App first gave its customers the ability to buy and sell Bitcoin back in January of 2018. Since then, its sales of the top cryptocurrency have steadily grown, and exploded in the first quarter of this year, with the company reporting a record $306 million in Bitcoin revenue. Square attributed much of the sales to a significant drop in the price of Bitcoin in March.
“Cash App revenue included $306 million in bitcoin revenue during the quarter, which benefited from an increase in transacting active bitcoin customers and growth in customer demand as a result of the decrease in the price of bitcoin.”
Cash App charges a service fee that’s reportedly as high as 1.76% for every Bitcoin transaction, and may also charge an additional fee to account for market volatility. The opportunity for PayPal to introduce a similar system for its user base of about 325 million could prove to be too good to pass up.
The possibility that PayPal will support cryptocurrency has fired up industry influencers like Lark Davis, as investors contemplate just how much demand PayPal could generate for BTC.
— Lark Davis (@TheCryptoLark) June 23, 2020
However, Paypal has yet to confirm that it’s ready to go crypto.
A late 2019 SEC filing from PayPal calls out the potential risks of supporting blockchain, the technology that powers the Bitcoin network.
“There is uncertainty associated with the legal and regulatory environment relating to privacy and data protection laws, which continue to develop in ways we cannot predict, including with respect to evolving technologies such as cloud computing, artificial intelligence, and blockchain technology.
Any failure or perceived failure to comply with existing or new laws of any government authority (including changes to or expansion of the interpretation of those laws), including those discussed in this risk factor, may subject us to significant fines, penalties, civil lawsuits, and enforcement actions in one or more jurisdictions, result in additional compliance requirements, increase regulatory scrutiny of our business, restrict our operations, and force us to change our business practices, make product or operational changes, or delay planned product launches or improvements.”