PayPal Expands Crypto Services for Businesses

In 2020, PayPal introduced features allowing individual customers to trade cryptocurrencies through their PayPal and Venmo accounts. Recently, the company has expanded these services to include business accounts.

On September 25, PayPal announced that business account holders are now able to purchase, trade, and manage cryptocurrencies directly within their PayPal accounts. This new capability is available to businesses across the United States, except for those located in New York.

Jose Fernandez da Ponte, the Senior Vice President of Blockchain, Cryptocurrency, and Digital Currencies at PayPal, stated the company’s enthusiasm for providing businesses with cryptocurrency functionalities similar to those offered to consumers. “Business owners have been increasingly looking for these capabilities,” he said. “We are thrilled to respond to that need and provide them with the tools to work with digital currencies easily.”

PayPal’s crypto service also allows merchants the flexibility to withdraw their digital currencies to external wallets or utilize cold storage for enhanced security, ensuring peace of mind while handling their assets.

PayPal’s New Stablecoin

In August 2023, PayPal entered the stablecoin arena by launching its own stablecoin called PayPal USD (PYUSD). This stablecoin has been issued in partnership with Paxos and is fully backed by U.S. dollar deposits and short-term cash equivalents, guaranteeing its redeemability at a 1:1 ratio to the U.S. dollar.

Following its launch, PayPal enhanced the functionality of PYUSD by integrating it into the Solana blockchain, which offers considerably lower transaction fees. With the aim of promoting everyday use for smaller purchases, such as coffee or lunch, PayPal is leveraging Solana’s fees that can be as low as $0.0025, a stark contrast to Ethereum’s often high costs during peak periods.

Additionally, PayPal has incorporated “confidential transactions” for PYUSD on the Solana network, which conceals transaction amounts from public records while maintaining necessary compliance visibility. This feature adds a layer of privacy without sacrificing regulatory accountability.

PYUSD’s Market Growth

As of August 2024, PYUSD has achieved a market capitalization of $1 billion, reflecting considerable progress, though it still trails competitors such as Tether (USDT) and Circle’s USD Coin (USDC). Tether leads with a market cap of $118 billion, followed by Circle’s $35 billion. Nevertheless, PayPal remains optimistic about the prospects for PYUSD, especially considering the advantages provided by its integration with the Solana blockchain.