This announcement is a big step for PayPal, cryptocurrencies, and the regulatory scene. The FinTech giant with its 346 million active accounts and 26 million merchants plans to offer its customers the possibility of receiving cryptocurrencies in their wallets and thus pay at merchants from the beginning of 2021. The new service will be provided on the regulatory basis of the NY Department of Financial Services (DFS) BitLicense.
DFS’ approval today follows our June 2020 announcement for a new framework for a conditional BitLicense to encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firmsDFS SUPERINTENDENT LINDA A. LACEWELL (press release)
PayPal will operate the new crypto service in partnership with Paxos Trust Company (Paxos), a New York State-chartered trust company.
With the DFS’ approval, Paxos will be able to provide trading and custodial services to PayPal to enable its customers to buy, sell, and hold virtual currency. Four DFS-approved virtual currencies will be initially available: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
In June 2015, DFS issued virtual currency regulation 23 NYCRR Part 200 under the New York Financial Services Law – the so-called BitLicense. Since 2015, under that “BitLicense” regulation or the limited purpose trust company provisions of the New York Banking Law, DFS has granted numerous virtual currency licenses and charters to ensure that New Yorkers have a well-regulated way to access the virtual currency marketplace and that New York remains at the center of technological innovation and forward-looking regulation.