Paxos has been chosen to supply cryptocurrencies for the new PayPal service, according to sources close to the matter.
PayPal Chooses Paxos
Online payment platform, PayPal is planning to launch cryptocurrency trading services to its millions of users globally. Two sources close to the partnership matter have revealed that PayPal has chosen Paxos to handle the supply of cryptocurrencies for the new service.
This latest development, if true, will be a big win for New York-based Paxos. It will come just a week after Paxos launched its crypto brokerage and announced that Revolut US, the American division of the UK-based fintech company, would be its first client. One of the sources claimed that an official announcement of the PayPal and Paxos partnership could be out as soon as this week.
The launching of this service would make PayPal one of the leading mainstream companies to provide cryptocurrency purchasing services. It would join others, such as Square and unicorn stock brokerage Robinhood, in the industry.
As at press time, it remains unclear which cryptocurrencies PayPal intends to offer to its users. Paxos declined to comment on this latest development. PayPal also did not return any request for comment regarding the rumor.
PayPal and the Crypto Future
Late last month, Trustedbrokerz.com broke the news regarding PayPal’s cryptocurrency plans. PayPal and its subsidiary, Venmo, are planning to launch the direct buying and selling of cryptocurrencies to a specific aspect of their 325 million users.
The Paxos brokerage recently launched an API-based solution for making crypto services easy for entities to roll out. It provides businesses with capabilities such as cryptocurrency purchasing, selling, holding, and sending. Paxos currently holds a New York state trust charter, which makes it a qualified custodian. As such, the company is legally permitted to hold gold and various digital assets, such as Bitcoin and Ethereum, on behalf of the institutional investors.
The sources close to the matter added that San Francisco-based cryptocurrency exchange Coinbase was considered to provide some white-labelled crypto offering. Coinbase and PayPal have a longstanding relationship, which is why the cryptocurrency exchange was considered. Furthermore, EU-based exchange Bitstamp (which provides crypto liquidity to Revolut in the U.K.) was also said to be in contention back then. However, both Coinbase and Bitstamp refused to comment on the story.
PayPal Lagging Behind
Traditional fintech companies have been trooping into the cryptocurrency sector, and PayPal entering the scene now means it will be playing catch up. The crypto space has been growing to become more than just a pseudo-asset with a fringe appeal. Cryptos have become a must-have for fintech companies and banks who seek to build revenue and increase their customer base.
To put it into perspective, Square, the payments app launched by Twitter CEO Jack Dorsey, has been experiencing growing revenue from Bitcoin trading. Square launched its Bitcoin purchase services via its Cash App in 2018. The company reported $306 million in Bitcoin revenue in the latest earnings report, highlighting the massive growth Cash App has experienced in the last few months.
Furthermore, the Robinhood fintech app, favored by the new generation of financial asset traders, started offering cryptocurrency trading services in February 2018. The platform had over 2 million downloads in the quarter it launched the Robinhood Crypto service, signaling the highest count ever by Robinhood.
The CEO of Paxos, Charles Cascarilla, stated last week that the company’s new brokerage service might serve as a tipping point for the crypto space. He suggested that more clients would follow Revolut US in using their service. He added that Paxos is working on scaling its internal exchange, itBit, which would enable it to meet the demands of new clients.