Published: July 22nd, 2020
A letter to the European Commission has confirmed that PayPal is working on cryptocurrency capabilities. The letter addressed to the EU framework for cryptocurrency markets caucus confirms rumors that the giant online payments platform is planning a partnership with its subsidiary Venmo to allow customers to buy and sell digital assets directly.
PayPal Inc. has revealed in a letter to the European Union that it is developing cryptocurrency capabilities. The statement is a response to a public consultation that the union launched in December 2019 to build a framework for cryptocurrency and digital assets markets.
According to Ledger Insights, an online publication specializing in features and global news about commerce and enterprise blockchain, the letter from PayPal was published by the EU along with other responses that the union received. PayPal told the commission that it is interested in the crypto-asset industry because of the tremendous growth the environment has enjoyed over the past few years. The FinTech company added that it continues to monitor and evaluate the global developments in the blockchain and distributed ledger space.
In the letter, PayPal highlighted its involvement in the Libra Project, fronted by Facebook. Stating that it signed a non-binding letter of intent to take part in the social media giant’s project, PayPal sought to clarify to the commission that it has taken tangible and unilateral steps to develop its cryptocurrency capabilities since joining the Libra Project.
PayPal explained further that even after exiting the Libra Project, it had not stopped its quest to advance its existing mission and business priority of enhancing access to democratized financial services.
PayPal claims in the letter to the commission that it has over 300 million customer accounts from all over the world, and it is adding thousands of other new users every month. The giant financial solutions company provides services to businesses and customers in 31 European countries and jurisdictions.
It holds a license granted by Luxembourg to offer payment and banking services.
PayPal suggested in the letter that the EU’s regulatory framework for cryptocurrencies should prioritize innovative services and products. It urges the block to consider bringing such products to the market without undue regulatory burden to the developers. Further, it wants the union to provide clear regulations, guidance, and market safeguards.
The FinTech company proposed three key agenda areas it wants the EU to include in its framework, a straightforward definition of the various crypto activities. PayPal adds that doing so will help the concerned companies to get all the necessary licenses and abide by the requisite regulations.
The other areas that PayPal stressed are the proper approach to risk-based procedures. PayPal wants such applications to be in line with the regulations that govern the EU’s anti-money laundering (AML) regulations and global standards. Lastly, PayPal suggests that any regulatory frameworks that the union creates for Europe be technology-neutral. The company thinks that such structures support innovation and healthy competition, which are necessary aspects for a fast-evolving space such as the blockchain environment.
PayPal’s proposals are in line with the Financial Action Task Force (FATF) recommendations, advocating a risk-based approach when crafting regulations for cryptocurrency firms and other related service providers. FAFT is an intergovernmental agency created in 1989 to develop policies to stem money laundering.
A story emerged in June, claiming that PayPal and Venmo, a mobile payment service subsidiary of the giant FinTech company, will soon roll out a service that allows users to buy and sell cryptocurrencies directly.
The rumors caused a sharp reaction to the Bitcoin price. A day after the story was published, Bitcoin shot up to $9,689, closing that day with an intraday gain of almost 4.5%.
PayPal refused to confirm or deny these claims when they first surfaced. However, PayPal is not new to the digital currency space. The company filed a patent application in 2018 for a real-time cryptocurrency transaction system.
Earlier in April, a news article appearing in Crypto News alleged that PayPal planned to make a plunge into the blockchain pool. These claims erupted when the giant payment platform hired a director to head its anti-money laundering and blockchain strategy unit of its New York office.
If nothing hints at PayPal’s intention to fly with other tech firms in the blockchain space, then the high-profile New York hiring was a dead giveaway.
The job advert said that PayPal was looking for a suitable person to liaise with its Global Financial Crimes Unit. It further stressed that the payment company wanted a person with extensive experience in blockchain technology.
Because PayPal wanted someone who will partner with businesses and strategists to evaluate new opportunities and partnerships, it is easy to conclude that the company wants a piece of the blockchain pie.
Even before showing an interest in an AML executive, PayPal has, in the past, posted job openings for engineering roles. Almost all these vacancy announcements indicated that the payment company wanted personnel with experience in blockchain.
Besides, the company has been assembling a Blockchain Research Department to operate within its Strategic Technology Enablement Unit. However, PayPal’s involvement in the Libra Project is its most significant cryptocurrency venture to date.
PayPal has since pulled out of the Facebook-initiated project citing complications with the existing regulations. After its exit, other primary retail industry and payment services providers such as Stripe, Visa, Mercado Pago, eBay, and MasterCard also pulled out.
PayPal has confirmed that it is interested in building its cryptocurrency capabilities. In a letter to the European Commission, the giant online payment platform said that it had had an interest in the blockchain industry for a long time now. PayPal said it would strive to provide better and more democratized global payment solutions. The PayPal letter also highlights a raft of regulatory recommendations that it would like the EU to adopt in its framework for cryptocurrency markets.