PayPal will begin allowing cryptocurrencies for use by U.S. account holders in the coming weeks as part of a migration toward digital payments, driven by the COVID-19 pandemic. In a statement, the company said there has been increased interest in digital currencies from central banks and consumers during the public health crisis.
“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,” chief executive Dan Schulman said.
He added that digital currencies could help governments disburse funds quickly to individuals.
“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,” he said.
According to a survey by the Bank for International Settlements, central banks representing 20% of the global population are expected to issue digital currencies in the next three years.
PayPal said it would initially allow Bitcoin, Ethereum, Bitcoin Cash, and Litecoin to be used directly within the PayPal digital wallet. It plans to expand the feature to Venmo and some international markets in the first half of 2021.
Fintech companies including Square and Robinhood Markets have begun allowing users to buy and sell cryptocurrencies but PayPal’s size makes its decision significant. Bitcoin reached its highest levels since July 2019 following the announcement.
“The price impact will be positive overall,” Joseph Edwards of the cryptocurrency brokerage Enigma Securities said. “There’s no comparison with regards to the potential exposure between the upside of PayPal offering this, and the upside of any similar previous offering.”
PayPal partners with Paxos Trust Company on the service. It said it would offer educational content and no service fees for buying or selling through December 31, 2020.
PayPal’s shares increased 4% on the news, their biggest jump in a month.