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- PayPal has significantly increased its ‘protection’ of cryptocurrencies since the end of last year.
- The company mainly owns Bitcoin and ETH.
- PayPal admits that it does not store the private keys of crypto users.
comp size MicroStrategy And Tesla are notorious for keeping large cryptocurrency war chests. However, another household name with an impressive amount under its belt is fintech giant PayPal.
PayPal I shared it recently Quarterly report With the US Securities and Exchange Commission (SEC), it claims $943 million in cryptocurrencies – mostly BTC and ETH.
BTC and ETH pool
In its Q1 filing, PayPal showed a 56% increase in its cryptocurrency holdings compared to the fourth quarter of last year. Bitcoin was the main currency, with $499 million held, while the company also announced $362 million in ETH. PayPal allows its users to transact with these two important cryptocurrencies, in addition to Bitcoin Cash and Litecoin.
At the end of last year, PayPal disclosed just $604 million in cryptocurrency, and has gained a lot more as 2023 begins. In addition, total reported liabilities for the first quarter were $1.2 billion, with 77% of the cryptocurrency accounted for. Another increase over the last quarter – about 10%. PayPal’s popularity as a cryptocurrency provider has gone from strength to strength since entering the market a few years ago.
Fueling crypto adoption
Quite unexpectedly, in October 2020, PayPal entered Crypto service game by allowing its customers to buy, sell and hold digital currencies through their accounts. Since then, the FinTech giant has experimented more and more in the space, including with stablecoins – though that has faded.
The increase in PayPal’s cryptocurrency holdings is likely due to the favorable market conditions seen during the first three months of the year. The company notes that it “allows[s] customers in certain markets to buy, hold, sell, receive and send certain cryptocurrencies” but the company also “acknowledges the responsibility to protect crypto assets.”
Not my keys
PayPal also explains in the report that the cryptocurrency custody services they disclosed are the sole responsibility of a single authorized third party that holds customers’ private keys. The risk of this is inherent and noted by PayPal. company States:
“We utilize one third-party custodian; as such, there is concentration risk in the event the custodian is not able to perform in accordance with our agreement.”
However, the company also highlights that it had not incurred any preemptive loss events at the time of the report.
on the flip side
- PayPal to stop Developed for a stablecoin yet investigation by New York regulators to Paxos and its work with another stablecoin, BUSD.
Why should you bother
As traditional and popular FinTech companies like PayPal make crypto more accessible to people, adoption of these assets should grow. However, the decision to place $1 billion in assets under the custody of a single company could prove disastrous should anything negative happen to the holding company.
Read more about how PayPal got into the crypto game:
Paypal to Bitcoin: Giant Steps for Payments in the Cryptocurrency Market.
Read more about Bittrex filing for bankruptcy:
Bittrex bankruptcy: SEC claims another cryptocurrency victim in the US.
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