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PayPal Again! Now Taps Paxos for Crypto Services

Paypal and the digital currencies

August 3, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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Paypal is one of the world’s largest online money transfer companies. It is a secure platform that allows users to send money fast. Paxos is a New York-based firm that offers crypto services.

Paxos is also a qualified custodian. It holds gold and other digital assets for other people. An example of these digital assets is Bitcoin. Custodians usually hold assets for institutional investors.

Reportedly, these two companies are teaming up to enable crypto buying and selling. These crypto-centric payment services will equip users with the assets to trade. Paxos will help supply PayPal’s huge user base with digital currencies. This is all part of the partnership agreement.

The rise of Stablecoins

Paxos is well-known for its stablecoin PAX. 

The stablecoin panorama seems to have grown during the first half of this year. This is some great news. It shows that people use crypto-assets on a large scale for various purposes. These uses may include making international payments and global remittances. Crypto-assets could be a potential candidate for a true medium of exchange.

The introduction of crypto services will bring change to the digital world. It’ll lead to the acceptance of digital currencies among the public.

Paxos brokerage

A few days ago, Paxos launched the “Paxos Crypto Brokerage.” Paxos then announced that their attempt to secure the first customer was successful. The customer was Revolut, US, which offers Bitcoin trading. Revolut is the American branch of the challenger banking giant in the UK. 

The CEO of Paxos is Charles Cascarilla. He hopes that the brokerage service will prove to be a strong tipping point for the adoption of crypto. He also hinted that besides PayPal, there are more clients on the way.

These clients range from banks to brokers, to fintech apps to e-commerce brands. Cascarilla promises that Paxos is more than ready to scale its own internal exchange. The scaling will enable it to meet the demands of all its new clients. ItBit is Paxos’ internal exchange.

The Paxos brokerage enables its partners to buy and sell crypto. It does so through API integration. Paxos handles all the regulatory compliance aspects. Additionally, it handles the liquidity and technological back-end. The partners only have to deal with the front-end aspects. Such include improving the user experience.

The new brokerage solution makes crypto services so easy for other companies to roll out. The API-based solution allows users to buy and sell cryptocurrencies. It also allows for cryptocurrency holding and sending.

The PayPal and Paxos Partnership

Sources say that an official announcement to the public will be in a couple of days. If confirmed, this deal will see PayPal ease trading in crypto. This will be beneficial to its active users, who are more than 325 million globally.

CoinDesk believes that PayPal will provide satisfactory services to its users.

Why PayPal Picked Paxos for new services

The management at PayPal hopes that Paxos will help them grow. They hope to become one of the most prominent companies offering crypto services. PayPal will join fellow publicly-traded payment providers. These providers are Square, Revolut, and Robinhood.

The growth of the Bitcoin trading revenue growth for Square is due to the entry of Revolut into the US market. Square is a payments unicorn launched by Jack Dorsey, who is Twitter’s CEO.

Square rolled out Bitcoin purchases in its Cash App in mid-2018. In its most recent earnings report, the company reported up to $306 million in Bitcoin revenue.

Robinhood first offered crypto to its users in February 2018. This fintech app had more than 2 million downloads in the quarter that it launched its crypto. These were the company’s highest count in history. The new generation day traders have played a huge role in favouring these downloads.

PayPal Cryptocurrencies

Up until now, it is not clear what other services PayPal will only offer. It might offer services with Bitcoin only or with other cryptocurrencies as well. Both PayPal and Paxos decline to give comments on the matter.

CoinDesk broke the news about PayPal’s crypto plans on the 22nd of June. Paypal hinted at its interest in cryptocurrency as early as March this year. The fintech giant has been monitoring the crypto sector. Sources say that PayPal has been working on crypto capabilities for a while now.

Now it’s quite clear that PayPal is ready to take the next step. The revelation of PayPal’s crypto ambitions caused a brief surge in the price of Bitcoin. 

Coinbase is San Francisco-based cryptocurrency exchange. It is one of the most popular in the United States and has had a longstanding relationship with PayPal. Coinbase allows users to buy and sell digital currencies via their PayPal accounts.

At some point, this company was in line to provide some kind of white-labelled crypto offering. Bitstamp is a European exchange providing crypto liquidity to Revolut. This company was also mentioned as a contender. These two companies declined to give their comments on this matter.

Fintechs and challenger-banking apps are betting on Bitcoin

Traditional fintech and challenger-banks are growing in stature. These keep spreading their crypto wings with every passing day. As a result, the crypto market is growing. It’s moving away from being a pseudo asset with a fringe appeal to a must-have asset. This is a must-have for any fintech and challenger bank that seeks to build revenue and customers.

Parting Shot

PayPal is a giant payment facilitator that it’s planning on diving head-first into crypto. It plans on offering its users crypto buying and selling services, among others. PayPal was one of the original members of the Libra Association. It was also the first member to pull out because of the rising regulatory concerns.

The partnership between these two companies is a huge milestone. This could be a new beginning for PayPal as it seeks to soar to greater heights. PayPal hopes to offer more diverse services to its users. A lot of users are so excited to start using these new services.

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