Paypal now lets you buy and sell cryptocurrencies, like Bitcoin and Ethereum. A lot of people are excited about it, and some have speculated that this is why the price of bitcoin has gone up.
But Paypal's FAQ reveals some big shortcomings to its cryptocurrency offerings. (I've included the entire FAQ below because there's not a direct URL to it)
First, you can't actually use the cryptocurrency to buy and sell things, though Paypal hints that paying for goods and services with cryptocurrencies could be possible in the future. The problem is, every crypto exchange in the world already lets you pay for things with cryptocurrencies.
I also learned from reading the FAQ that Paypal controls the private keys associated with any cryptocurrency you buy through Paypal. What that means is you have only illusory control of your cryptocurrency, not actual control. They can decide to take your bitcoin away from you and force you to do through a difficult appeal process to get it back. With Paypal's long history of freezing people's accounts for all sorts of reasons, it doesn't seem like a good idea to buy crypto through Paypal.
Now, if Paypal allowed you to immediately transfer any crypto you buy to a wallet that you control, that would make it better. But the FAQ says:
"the crypto in your account cannot be transferred to other accounts on or off PayPal." Huh?
tldr; buying cryptocurrency on Paypal means:
- You can't use it for anything.
- Paypal can lock you out of your account at any time.
Crypto on PayPal FAQ
What can I do with crypto on PayPal?
You can buy four different cryptos on PayPal: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. You can also sell the crypto you buy on PayPal or hold it in your account.
Do I need to sign up for anything?
If you have a PayPal Cash account, all you need to do is confirm some account info during your first purchase. If you don't have a PayPal Cash account, you can apply for one during your first purchase.
Can I use crypto to pay or send money?
While you can't currently use crypto as a way to pay or send money on PayPal, we like the way you think! Many people have big dreams for the future of crypto and so do we.
Are there any fees?
When buying and selling crypto, there is a transaction fee and a currency conversion spread, which is included in the exchange rate. You'll see the transaction fee and final exchange rate before confirming any purchase or sale of crypto (See rates and fees at https://www.paypal.com/en/webapps/mpp/paypal-fees). There are no fees for holding crypto in your account.
Why is there an exchange rate for crypto?
Since crypto is digital money, you're essentially swapping one currency for another when you buy and sell it. The exchange rate tells you how much crypto or dollars you'll get in the swap and refreshes often because the value of crypto is constantly changing.
Can I transfer crypto into and out of PayPal?
Currently, you can only hold the crypto that you buy on PayPal in your account. Additionally, the crypto in your account cannot be transferred to other accounts on or off PayPal.
Will PayPal protect my crypto?
PayPal works 24/7 to prevent theft and fraud. If you suspect fraudulent activity on your account, please contact customer service by visiting https://www.paypal.com/us/smarthelp/home or call (888) 221-1161 immediately to report it and we'll review your account activity.
What we can't protect you from are losses that result from crypto prices going way down. Yes, crypto can be fun and exciting, but it's also volatile, so we recommend doing your research and making decisions carefully.
Will I get a private key for the crypto I buy on PayPal?
You own the crypto you buy on PayPal but will not be provided with a private key. In case you're wondering, a private key is a person's secret code to access and manage their crypto. If lost, stolen, or even forgotten they can never get to their crypto again — pretty risky in its own right. As long as you can log in to your PayPal account, your crypto will always be at your fingertips.
Where does the money go when I sell my crypto?
The money goes directly to your PayPal Cash or PayPal Cash Plus balance where you can use it as you normally would.
How long does it take to receive money from selling crypto?
Usually, the money you receive from selling crypto will be available instantly in your PayPal Cash or PayPal Cash Plus balance. As with all transactions, crypto sales are subject to review and could be delayed or stopped if there's an issue.