PayPal Finally Lets Users Transfer Crypto Out to External Wallets

PayPal will finally allow users to transfer cryptocurrencies including Bitcoin to external wallets, nearly 2 years after the fintech giant opened up its platform to digital currencies. The feature will be available to select US users starting 7 June and will be rolled out to all eligible US customers in the coming months. PayPal started allowing customers to buy, sell, and hold Bitcoin, Ether, Bitcoin Cash, and Litecoin in October 2020. But users were not allowed to move crypto holdings off its platform until now.

The company said it won’t charge fees for crypto transfers to other PayPal users. For transfers outside of PayPal, users will have to pay network fees, which are payments to the operators of blockchain networks like Ethereum or Bitcoin for processing transactions.

The system also promises to be easy to use, but it does require an ID verification check, which is usually initiated once per user. The ID check involves scanning a photo ID and the user’s face, and was likely created to help crack down on money laundering and other illicit schemes.

PayPal charges fees for crypto trading, and earns a cut off exchange rates for transactions between cryptocurrencies and dollars.

PayPal is pushing into crypto in other ways, too. Users of its app can now convert crypto holdings to cash when making a purchase at online stores. Users of the company’s Venmo credit card can also buy crypto with cash back earned from card purchases.

“We are leaning forward on all the things that could happen as you move into a digital dollar and into a DLT [distributed ledger technology] world,” CEO Dan Schulman said on the company’s first-quarter earnings call in April, referring to blockchains like Bitcoin and Ether.

The new services should make PayPal far more competitive with other crypto wallets that offer full functionality, including wallets from Metamask and Coinbase.