PayPal Expands Crypto Services to U.S. Merchants

PayPal took a major step in broadening cryptocurrency adoption by enabling U.S. business accounts to buy, hold, and sell crypto directly through their PayPal accounts. This new feature grants millions of U.S. merchants access to the growing digital asset market, simplifying how they manage and engage with cryptocurrencies. However, due to strict BitLicense regulations, this feature is currently unavailable in New York.

Buy, Hold, and Sell Crypto via PayPal and Venmo Accounts

Previously, PayPal introduced cryptocurrency capabilities for personal accounts in 2020. Now, merchants are included in the expansion, giving businesses the same versatile digital asset management options. Business owners can now buy, hold, and sell supported cryptocurrencies using both PayPal and Venmo, making it easier to integrate crypto transactions into their financial operations.

Not Available in New York Due to BitLicense Regulations

While this new crypto functionality is accessible to merchants nationwide, businesses in New York cannot participate due to the state’s strict cryptocurrency regulations under the BitLicense framework. This limits the reach of the service in one of the nation's most significant financial hubs.

PayPal USD (PYUSD) and Recent Market Challenges

In 2023, PayPal launched its stablecoin, PayPal USD (PYUSD), which is fully backed by U.S. dollar deposits, U.S. Treasuries, and similar cash equivalents. PYUSD can be bought and sold at a rate of $1.00 per PayPal USD, either through PayPal or Venmo. The issuance and custody of PYUSD are managed by Paxos Trust Company, ensuring it complies with regulatory standards.

However, despite early success, PYUSD has faced some hurdles. Between August and September 2024, the stablecoin's market capitalization fell by nearly 30%, dropping from $1.012 billion to $712.52 million. This decline is mainly attributed to reduced demand on the Solana blockchain, one of the networks supporting PYUSD transactions.

Solana Blockchain vs. Ethereum Network

PYUSD was initially launched on the Ethereum network but later expanded to the Solana blockchain, offering users more options. While Ethereum is known for its robust smart contract capabilities, it has historically experienced periods of higher charges during times of network congestion. Ethereum is also far more expensive than Solana from an investment standpoint. As of December 2022, the price of one Ether (ETH) coin was around $1,200. In contrast, Solana is a cheaper, albeit less popular, option, with a Solana (SOL) coin priced at approximately $12. Solana’s lower transaction costs and faster processing speeds make it an attractive alternative for certain types of crypto transactions. However, despite these advantages, the recent decline in PYUSD usage highlights the challenges of maintaining stable demand across multiple blockchains.

What’s Next for PayPal’s Crypto Strategy?

PayPal continues to innovate and expand its cryptocurrency offerings, positioning itself as a leader in digital payments. By making it easier for U.S. merchants to integrate crypto into their daily operations, PayPal is empowering businesses to adopt digital currencies as part of their future growth strategies.

Despite recent challenges with PYUSD’s market performance, PayPal’s efforts to provide versatile and scalable solutions, backed by solid partnerships like Paxos Trust Company, aim to stabilize the role of cryptocurrencies in mainstream financial systems.

Learn More About PayPal’s Crypto Terms

For those business owners interested in PayPal crypto services, learn more about the terms and conditions surrounding PayPal’s cryptocurrency. More information can be found through PayPal's official cryptocurrency terms as well as Paxos’ terms, which apply to PYUSD.