The migration toward digital payments and digital representations of value continues to accelerate, driven by the COVID-19 pandemic and the increased interest in digital currencies from central banks and consumers. PayPal Holdings, Inc. (NASDAQ: PYPL) today announced the launch of a new service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account, and signaled its plans to significantly increase cryptocurrency's utility by making it available as a funding source for purchases at its 26 million merchants worldwide.

Following the news, Danny Scott, Co-Founder/CEO at CoinCorner, says: 

"It’s only been a matter of time before PayPal offered their customers a way to buy Bitcoin. Earlier in the summer, they announced that they were looking at the option, having dropped out of the Libra association a little over a year ago. 

The news hasn’t really come as a surprise to the industry. One of PayPal’s competitors in the US, Square, had seen revenue of $306 million in Q1 2020 surpassing its fiat revenue stream by around $100 million.

PayPal is currently only offering this service to the US and by the sounds of the functionality, it’s very basic, meaning that it’s a closed loop - aka, you can’t withdraw your Bitcoin and use it elsewhere, or send your Bitcoin from outside of PayPal into their system.

The announcement is still great news, however, as it shows a positive step forward for the industry, and brings yet more credibility to Bitcoin and its future."

The announcement that PayPal will allow its users to buy, sell and hold cryptocurrencies is the most important news this year for the digital asset industry, thinks Charles Hayter, CryptoCompare CEO. He comments:

“With PayPal’s 346 million users and 26 million merchants this development brings digital assets to the mainstream public in a more meaningful way than anything else we have seen this year. However, users will not be allowed to transfer cryptocurrency to or from PayPal and will not control their private keys.

So whilst cryptocurrency adoption will grow thanks to PayPal’s move, the fintech firm won’t be a true on-ramp to the cryptocurrency ecosystem as users who purchase cryptoassets using PayPal will be unable to interact with blockchain-based applications.

Retail trading of bitcoin has been a significant profit generator for Square and PayPal has been rewarded for tapping into this lucrative market with a 4% bump in stock price. We can expect to see more payment providers follow suit.”