Payments platform Paypal held over half a billion dollars worth of the two largest cryptocurrencies — Bitcoin & Ethereum — as of December 31, 2021, according to its year-end report to the Securities and Exchange Commission (SEC).
It was in October 2020 when PayPal entered the cryptocurrency market, announcing that its customers will be able to buy and sell Bitcoin and other virtual currencies using their PayPal accounts.
As per SEC filings, PayPal Held $291 million in Bitcoin (BTC), and $250 million in Ethereum (ETH). Besides, another $63 million in assets were held in both Bitcoin Cash (BCH) and Litecoin (LTC), bringing PayPal's total crypto held on behalf of its customers to $604 million.
The amount is less than the previous quarter's figures, which logged $694 million in crypto as of September 31, back when Bitcoin traded at $19,400. That was also before the collapse of crypto exchange FTX, which resulted the Bitcoin's price went down to $16,600 by the end of the year.
PayPal mentions in the filing, "We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. We engage third parties, which are licensed trust companies, to provide certain custodial services, including holding our customers’ cryptographic key information, securing our customers’ crypto assets, and protecting them from loss or theft, including indemnification against certain types of losses such as theft.
"Our third-party custodian holds the crypto assets in a custodial account in PayPal’s name for the benefit of PayPal’s customers. We maintain the internal recordkeeping of our customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers in that custodial account. Given that we currently utilize one third-party custodian, there is concentration risk in the event the custodian is not able to perform in accordance with our agreement. ", mentions the filing by PayPal.
In June last year, PayPal started allowing users to withdraw their crypto astets to external wallets however just as a host of centralized exchanges and lending firms began to freeze user assets, PayPal too followed the knack.
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