PayPal is expanding their digital asset presence once again. After recently announcing the launch of their own USD stablecoin Paypal USD (PYUSD), PayPal has now announced that you can use PayPal with a MetaMask wallet for both funding and cashing out your crypto assets. In May 2023, MetaMask integrated with PayPal to allow US customers to buy supported cryptocurrencies through their MetaMask wallet, so this new announcement builds upon their already existing relationship.
On And Off Ramps for Web3 Payments
Apart from PayPal’s integration with MetaMask to be an on-ramp for US customers in May, the payments platform also has on-ramp integration with Ledger Live, the application for Ledger hardware wallets. Both options are convenient ways for US customers to buy crypto using their PayPal account, whether with their balance or their connected bank account.
Now, with the announcement of Off Ramps, US crypto wallet users can convert their crypto to USD directly from their crypto wallets into their PayPal balance. They can then use those funds to shop, send, save, or transfer them to their bank or debit card. Merchants can easily set up these PayPal integrations into their sites.
“Once integrated, web3 merchants can help grow their user base by connecting to PayPal’s fast and seamless payments experience trusted by millions, while leveraging PayPal’s robust security controls and tools for fraud management, chargebacks and disputes.”
What it Means for Crypto
Overall, this is a good thing for crypto as it could certainly help push adoption forward. It also provides a somewhat regulated manner for more skeptical people to buy into crypto for the first time, as they now have an easy way to both buy-in and cash out if/when they choose to do so. As more platforms integrate PayPal’s ramps this will only increase the potential for adoption and increased users on blockchain networks.
However, much like with the PYUSD stablecoin, this is a very centralized service that PayPal is providing. While it may be a good thing to push adoption forward, it’s also a good way for PayPal and the US government to keep track of who’s buying crypto, where it’s going, and what it’s being used for.
PayPal also has full control over PYUSD so it’s possible that they can freeze or delete your holdings if you try to use them on a platform that PayPal doesn’t like, such as a liquidity pool on Uniswap. This is a somewhat extreme example though, as long as there aren’t bad actors trying to use PayPal’s ramps, there will likely be no issues for those that choose to use them.
PayPal, much like the traditional financial institutions that are trying to get Bitcoin ETFs, are just trying to get a piece of the pie. By providing these on and off ramps, they can earn extra fees for both ends of sales.
In addition, because PYUSD can be used at a variety of merchants globally, people are more likely to convert funds into PYUSD and then hold them on PayPal. This then allows PayPal to make even more money because they hold real USD and stuff like short-term treasuries issued by the US which are offering interest rates of 5%. PayPal keeps all of that extra interest, increasing their overall profitability. PayPal users won’t earn any of that interest themselves, the only way to earn interest is to transfer to their traditional bank account.