PayPal Holds Massive Amounts of BTC and ETH
Global payments giant PayPal has offered $604 million worth of cryptocurrency custody for its customers by the end of 2022, with Bitcoin and Ethereum accounting for almost 90% of this service PayPal provides. According to the US Securities and Exchange Commission’s annual report, PayPal has $291 million in BTC, $250 million in ETH, and $63 million in Litecoin and Bitcoin Cash as of December 31.
PayPal held $690 million in crypto assets in September, but with the recent market declines, that value has dropped to $604 million. PayPal’s crypto assets account for 67% of the company’s total financial liabilities and amount to $902 million as of December 31. According to the report, the company’s total financial assets are over $25 billion.
PayPal introduced the service in October 2020 that allows US-based customers to buy and sell certain cryptocurrencies. The company has since expanded its crypto service to the UK and is planning further international expansion. This is the first time the payments giant has revealed a breakdown of its crypto holdings, as it did not disclose crypto holdings in its previous annual financial report. In the filing, PayPal said they felt the need to include a breakdown of crypto assets due to recent developments in the industry:
“Due to the unique risks associated with cryptocurrencies, including technological, legal and regulatory risks, we accept a crypto-asset protection obligation to reflect our mission to protect crypto-assets held for the benefit of our customers.”
PayPal further explained that customers are storing their digital assets through a third-party escrow. The company added that the contract requires the custodian to separate client assets and not mix them with private or other assets, adding:
“We cannot be sure that these contractual obligations, even if duly fulfilled by the custodian, will be effective in preventing such assets from being treated as part of the custodian’s legacy under bankruptcy or other liquidation law.”
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