PayPal Continues to Lead in TradFi Crypto Payments

Although PayPal has been active in the crypto sector since 2014, in the form of allowing individuals to conduct transactions using certain specific cryptocurrencies

PayPal, a leading payment processor, has been making significant efforts to integrate crypto into its services. Recently, the company announced that it will now allow merchant customers to buy, sell, and hold crypto directly from their merchant wallets. This move is expected to drive greater adoption of crypto for payments.

With over 400 million customers worldwide and 36 million merchant accounts, PayPal is well-positioned to facilitate this transition. The company's initiatives, such as the launch of its own stablecoin (PYUSD) in August 2023, are also serving as a model for other TradFi institutions looking to pivot into crypto payments.

Here are a few key points that investors should keep an eye on as PayPal continues its evolution into a crypto-fiat payment giant:

- Regulated Payment Processors Continue To Lead the Way: Despite the launch of crypto projects by presidential candidates, the resurgence of decentralized finance, non-fungible tokens taking new forms, and stablecoin issuers growing in market capitalization, regulated entities continue to exercise growing leadership.

- Mass Adoption Will Require Interoperability: One of the more interesting developments that were included in the announcement of crypto integration for merchant payments is that merchant customers that use crypto will have the ability to transfer holdings into other hot wallets or even transfer holdings into cold wallets. Interoperability has long been a work-in-progress for organizations seeking to develop mass market solutions.

- Tax Treatment Presents An Ongoing Challenge: Crypto taxes remain an ongoing and substantial obstacle toward wider utilization of crypto for payment purposes. Even for stablecoins, whose sole purpose is to be used as a medium of exchange, the tax liability and reporting purposes remain exactly the same as for cryptocurrencies such as bitcoin.

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