PayPal Inc (NASDAQ;PYPL), the online payment giant, has given a significant boost to cryptocurrencies by allowing transactions to be made through its system.
Clients will also be able to buy, sell and hold cryptocurrencies from their PayPal accounts, said the US firm.
Initially, transactions will be allowed in bitcoin, ethereum, bitcoin cash and litecoin to US account holders, though expansion into additional cryptos and its own mobile system Venmo might follow later in 2021, PayPal said in a statement.
The company added that from early next year customers will be able to use their cryptocurrency holdings for payment at 26mln merchants around the globe.
“Consumers will be able to instantly convert their selected cryptocurrency balance into fiat currency, with certainty of value and no incremental fees,” it added.
PayPal merchants will have no additional integrations or fees, it said, but all merchant transactions will be settled in fiat currency (sterling, dollar, euro etc) at their current PayPal rates.
“In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders.”
The move follows the award to PayPal of a conditional Bitlicense from the New York State Department of Financial Services, which it said was the first of its kind to be granted.
Paypal said it hoped to encourage the growth of cryptos, development which it believes has been hampered by their limited utility as a medium of exchange.
Advances in platform technology, however, had made it possible for digital currencies to become mainstream said PayPal, which wants to be prepared for new currencies that might be developed by central banks and companies.
“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,” Dan Schulman, president and chief executive said.
Bitcoin, the first and most widely traded cryptocurrency, shot up in value by almost 5% to US$12,451 on the news adding to a rally that has seen its value rise by 25% since the start of September.