The digital payments company Paypal has been making a big push to enter the crypto industry and is now examining the possibility of launching their own stablecoin.
The Developer Steve Moser found evidence in PayPal’s app that revealed the company’s intention to dig into the stablecoin’s terrain. He shared the data –hidden code and images– of what could become the “PayPal Coin” with Bloomberg. Reportedly, the coin would be backed by USD.
The senior vice president of crypto and digital currencies at PayPal Jose Fernandez da Ponte confirmed the information in a statement for Bloomberg: “We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators,”
As he also said on a podcast, the intention appears to be to design a stablecoin “that is purpose-built for payments.”
Previously, we had reported that PayPal had been discussing launching their own digital coin. They had been engaging with developers like Ava Labs for this purpose.
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But Do You Want To Own Their Crypto?
PayPal is not new to crypto. They had launched a service to convert the user’s holdings into fiat currencies (Bitcoin, Ethereum, Bitcoin Cash, and Litecoin), but this feature was welcome with divided views.
If you buy your Bitcoin on PayPal you didn’t buy Bitcoin. What you bought is, exposure to the price of Bitcoin mediated by a custodian who you hope is doing good risk management practices. But, who you cannot audit for their actual existence of reserves.
PayPal is no longer viewed as the safest way to pay. Here are some relevant points to consider:
- The platform’s reimbursement policy is tricky. Many users have claimed PayPal’s policy has resulted in inconsistency and was unuseful to them.
- Does not protect the user’s privacy, does not provide uncensorable transfer.
- Unlike a decentralized crypto network, the payment platform cares about what you do for a living and might freeze your funds if it suspects your activities do not meet with their morals.
- Funds might get frozen without previous notice and it is unclear when –or if– the user will see their money back.
- Cross-border payments are complicated and might take long periods of time.
- Fees are very high.
- It has been described as the worst way to invest in Bitcoin.
- If you’re a small business from the U.S. using PayPal, the new taxation policy will likely affect you.
We don’t know yet what their own stablecoin might look like, but a payment company like Paypal is anything but decentralized and defeats –or even offends– the original ideals of crypto.
As they try to dive in and catch a wave of the crypto hype, seeing their history makes people wary of any of their products.
The IRS Is Cracking Down On PayPal Payments
Furthermore, President Biden just signed the $1.9 trillion American Rescue Plan into law, which includes the requirement for payment companies like PayPal, Venmo, and Zelle, to report to the tax agency all transactions totaling $600 or more in a year, thus the users “must file and furnish a Form 1099-K” to report all commercial income, said the IRS.
Previously, the platforms only had to report transactions over $20,000. As the tax agency explained, this also applies to those who “have a holiday craft business” and have used these apps to receive payments.