PayPal is rolling out crypto services in UK What you need to know.

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PayPal announced in October that it would offer crypto services to users in the United States Dreamstime

PayPal Holdings said on Monday it would give UK users the ability to buy, sell and hold Bitcoin and other major tokenized assets this week, marking the payment giants’ first international push into crypto services since. offered them to the United States last year. But this move should be closely scrutinized by regulators.

The announcement comes at a favorable time for Bitcoin prices, which briefly rose above $ 50,000 on Sunday night for the first time since May, after hitting recent lows below $ 30,000 last month.

Shares of PayPal (ticker: PYPL) rose 1.3% on Monday, failing to keep pace with the gains of the broader Nasdaq Composite index, which rose 1.7%.

The comeback story. The expansion of PayPal’s crypto services to its US customers last year was a significant milestone on the path to institutional adoption of Bitcoin and other crypto assets. The move to PayPal, along with Square Peer Payments, also helped spark a frenzy of retail investor interest in Bitcoin.

A single Bitcoin was worth less than $ 12,000 when PayPal made the announcement in the United States in October.

In the United States, cryptos have been regulated by the Securities and Exchange Commission and the regulator has not hesitated to intervene. SEC Commissioner Gary Gensler said in August 2020 that there was not enough investor protection in cryptocurrencies. It’s more like the Wild West, he said.

UK regulators have also focused largely on consumer rights and protections, with the Financial Conduct Authority (FCA) warning in June that investors in crypto assets should be prepared to lose all their money. British regulators also banned the people’s exchange Binance from participating in regulated activities and banned an advertising campaign from another exchange that was considered misleading because it said it was time to buy Bitcoin.

What’s new. PayPal will allow UK customers to buy, hold and sell Bitcoin, Ethereum, Litecoin and Bitcoin Cash on its platform starting this week.

As the first international expansion of crypto services outside of the United States, PayPal places a strong emphasis on education and consumer protection, with the company noting that it would allow secure and responsible access. The payments giant also said it will encourage customers to research and educate themselves about the risks of crypto before making transactions.

Our global reach, digital payments expertise and knowledge of consumers and businesses, combined with rigorous security and compliance controls, provide us with the unique opportunity and responsibility to help people in the UK to explore cryptocurrency, said Jose Fernandez da Ponte, a PayPal. vice president and director overseeing his work on blockchain, cryptography and digital currency.

We are committed to continuing to work closely with regulators in the UK and around the world, to offer our support and significantly contribute to shaping the role that digital currencies will play in the future of finance and commerce. global, added da Ponte.

Look forward. PayPal said the cryptocurrency has the potential to become mainstream in the UK as a result of its expansion.

The company may be right. But between the business move and widespread adoption there is a UK consumer base that may not be a perfect fit.

FCA research in June suggested that most of Britain’s 2.3 million owners of crypto assets were generally unaware of consumer warnings, and that 14% had borrowed money to fund investments. cryptographic.

A study by UK broker AJ Bell in March suggested that most crypto investors do not have tax-free savings accounts and are far less willing to lose money on their crypto investments than volatility. does not suggest it.

PayPal took its hat off to regulatory concerns, highlighting the educational content it will host alongside its crypto service, including the risks. That’s welcome, although there are already worrying signs of reckless behavior on the part of consumers, said Laith Khalaf, analyst at AJ Bell.

In the crypto market itself, PayPal’s presence is positive in that it is a high profile publicly traded company that is already under regulatory scrutiny. But overall, the crypto craze remains a concern for consumer advocates and regulators, Khalaf added.

Currently, the UK crypto holder base looks less like principled consumers willing to use Bitcoin on PayPal purchases and more like over-enthusiastic retail investors. Of course, that could change and PayPal could move into the space and drive mainstream adoption. But this road may be fraught with scrutiny from regulators who are well aware of the harm to consumers and are not afraid to step in.

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