Biggest News of the Week: Going Mainstream or A Sacrifice in the Name of Pump?

This week, the big news came in the form of PayPal announcing support for cryptocurrencies.

Not only the payments company would allow its users to buy, sell, and hold crypto, but soon it will also allow the users to shop at its 26 million merchants using crypto.

For now, Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) are the ones supported directly within the PayPal digital wallet.

“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman, president, and CEO of PayPal.

As reflected in the price of Bitcoin surging past $13,000 to a new 2020 high, the market was elated. The other three digital assets had a good time with gains.

First Thing First

Why was this particular set of cryptos selected?

These crypto are actually among the digital assets approved by the New York State Department of Financial Services, and the NYDFS has granted PayPal a first-of-its-kind conditional Bitlicense.

Other coins approved by NYDFS for listing include Binance USD (BUSD), Gemini Dollar (GUSD), Paxos Standard (PAX), and Pax Gold (PAXG). Ethereum Classic (ETC) and Ripple (XRP) joined these cryptos in approval for the custody list.

Now, some feel by adding altcoins, it has just become another ‘exchange listing pump’ phenomenon.

“New bullish catalyst will be which altcoin Paypal lists news. They will be the Coinbase listing of 2020 and 2021,” noted one trader.

As a matter of fact, the company could really be setting the stage for its own dollar-pegged digital currency to “reduce their dependence on the correspondent banking system and other card networks,” as Facebook is doing with Libra, said Meltem Demirors, the chief strategy officer at CoinShares.

Bullish AF

PayPal news was met with excitement; the market celebrated it with gusto, seeing it as a sign that other institutions now would have no choice but to follow suit.

“We knew crypto trading on PayPal was coming, but to also enable crypto use for shopping at its 26 M merchant network is huge. Also, with PayPal and Venmo in the fray, every Fintech firm will now follow,” said a partner at the crypto fund, The Spartan Group.

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“If you liked the recent PayPal and Revolut launches, you’ll love the dozens of neo-banks and fintech teams currently scrambling to figure out what their “crypto strategy” is,” said Arjun Balaji.

In terms of exposure, “PayPal is bullish AF,” as the company has 487 million userbases while the bitcoin network currently has only 187 million total on-chain participants (23.4 million on-chain holders plus 101 million exchange users).

But is it Really?

While the digital asset price remains in bullish momentum, it didn’t take much time for the excitement to die down in the market.

Some even called this rally, “insiders frontrunning the PayPal news,” while others think it just “the most bullshit cope.”

For starters, PayPal has been merely playing catch up, and Bitcoin is the one providing PayPal an alternative to central banks – “archaic inflationary political central bank monopolies.”

The real caveat is that merchants won’t be receiving payments in virtual coins. But the biggest issue has been taken with the fact that PayPal doesn’t allow the cryptocurrencies in its account to be transferred to other accounts, on or off PayPal.

“So, this is all a big PayPal nothing burger, just entries in a central PayPal database, nothing to do with bitcoin,” said analyst PlanB.

Popular hardware wallet Trezor also said: “You shouldn’t use PayPal” because ‘not your keys, not your coin’ as Paypal doesn’t provide the private key of the crypto holdings.

Not only its ex-CEO Bill Harris called Bitcoin “the greatest scam ever,” but PayPal is also known for “stifling competition and preventing users from ever withdrawing their cryptocurrency to the safety of a wallet they control the keys to,” wrote Trezor in a blog post.

Amidst this hard criticism against PayPal for restricting self-custody being “objectively bad” and “necessary for Bitcoin to succeed,” others argue that this was exactly how Square’s Cash app started out, and eventually, it opened up.

“This is a great way for a risk-averse firm to offer its customers exposure to Bitcoin without worrying about “travel rule” compliance,” said Jerry Brito, executive director at crypto think tank Coin Center.

“In all fairness to PayPal, those features may come later,” tweeted Weiss Crypto Ratings.

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Author: AnTy

JPMorgan: Bitcoin has “Considerable” Long-Term Upside as it Competes with Gold “More Intensely”

The tide is turning. This week PayPal announced support for cryptocurrencies, and now JP Morgan is changing the tune; as it says, Bitcoin is competing with gold as an “alternative” currency.

The physical gold market, favored by the older generations, is worth $2.6 trillion, including the assets held within gold ETFs.

Bitcoin, on the other hand, has a market cap of $240 billion and mostly favored by millennial investors. In 2020, to date, Bitcoin has surged more than 80% compared to gold’s nearly 25%.

To catch up to hold in terms of market value, the leading digital currency would have to surge more than 10x from current levels. JPMorgan said in a note on Friday,

“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price.”

Over time, the investment bank said crypto could be held for other reasons than just being a wealth store as gold is. JPMorgan stated,

“Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value.”

It also mentioned that the endorsement from the payments company is “another big step toward corporate support for bitcoin.” This, according to them, would further enhance millennials’ usage of BTC as an alternative currency.

Greater interest by institutional investors

Overall, the potential long-term upside for bitcoin is considerable as it competes more “intensely” with gold, “given that millennials would become over time a more important component of investors’ universe,” states JPMorgan.

Millennials and corporate endorsement of the digital currency have also induced greater interest by institutional investors, further says the report.

This is evidenced by the spike in activity across both bitcoin futures and options at CME. Before Paypal’s announcement this week, open interest on CME bitcoin futures averaged a record of 10.5K contracts per day in Q3, up 32% from Q2 and up 127% vs. Q3 2019.

Moreover, institutional flow saw strong growth, with 692 new accounts added, and the number of large OI holders also averaged 79 in Q3, up 64% compared to Q3 2019.

“Holy Cow. Most bullish commentary for bitcoin that I have read from JP Morgan” noted Dan Tapiero, co-founder of 10T Holdings. “Widespread research piece reaches all clients of the bank. Paypal announcement “cover” for other traditional players to get involved,” he added.

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Author: AnTy

JPMorgan: Bitcoin has ‘Considerable’ Long-Term Upside as it Competes with Gold ‘More Intensely’

The tide is turning.

This week PayPal announced support for cryptocurrencies, and now JP Morgan is changing the tune, as it says, Bitcoin is competing with gold as an “alternative” currency.

The physical gold market, favored by the older generations, is worth $2.6 trillion, including the assets held within gold ETFs.

Bitcoin, on the other hand, has a market cap of $240 billion and mostly favored by millennial investors. In 2020, to date, Bitcoin has surged more than 80% compared to gold’s nearly 25%.

To catch up to hold in terms of market value, the leading digital currency would have to surge more than 10x from current levels. JPMorgan said in a note on Friday,

“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price.”

Over time, the investment bank said crypto could be held for other reasons than just being a store of wealth as gold is.

“Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value.”

It also mentioned PayPal that the endorsement from the payments company is “another big step toward corporate support for bitcoin.” This, according to them, would further enhance millennials’ usage of BTC as an alternative currency.

Greater interest by institutional investors

Overall, the potential long-term upside for bitcoin is considerable as it competes more “intensely” with gold, “given that millennials would become over time a more important component of investors’ universe,” states JPMorgan.

Millennials and corporate endorsement of the digital currency have also induced greater interest by institutional investors, further says the report.

This is evidenced by the spike in activity across both bitcoin futures and options at CME. Before Paypal’s announcement this week, open interest on CME bitcoin futures averaged a record of 10.5K contracts per day in Q3, up 32% from Q2 and up 127% vs. Q3 2019.

Moreover, institutional flow saw strong growth, with 692 new accounts added, and the number of large OI holders also averaged 79 in Q3, up 64% compared to Q3 2019.

“Holy Cow. Most bullish commentary for bitcoin that I have read from JP Morgan” noted Dan Tapiero, co-founder of 10T Holdings. “Widespread research piece reaches all clients of the bank. Paypal announcement “cover” for other traditional players to get involved,” he added.

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Author: AnTy

PayPal Exploring Acquiring Crypto Companies, Already in Talks with Bitcoin Custodian BitGo

PayPal is now exploring acquisitions of crypto companies, including bitcoin custodian BitGo, reported Bloomberg.

This week, Paypal announcing support, buy, sell, and hold for cryptos has been the biggest news. The online payments company will also be soon allowing its customers to shop at its 26 million merchants within its network with digital currencies.

This led to a spike in bitcoins’ price past $13,000, a new 2020 high last seen in July last year, and the other three altcoins – Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC), that are supported as well.

Now, PayPal is holding talks with BitGo, which are still in the early stage, and it could either be finalized within weeks or fall out as it is possible PayPal might opt to buy other targets.

BitGo basically helps investors store BTC securely. Besides custody, it also provides trading, lending, and staking functions. The company has also issued $1.5 billion worth of wrapped bitcoin (WBTC) on the Ethereum network.

Backed by investors like Goldman Sachs Group, Digital Currency Group, DRW, Craft Ventures, Galaxy Digital Ventures, Redpoint Ventures, Founders Fund, and Valor Equity Partners, BitGo raised $58.5 million in 2018 at a $170 million valuation.

The Palo Alto, California-based company, was founded in 2013 by CEO Mike Belshe and applied to New York regulators in August to become an independent, regulated qualified custodian under New York State Banking Law.

At the time of the crypto announcement, PayPal had said it would partner with the regulated crypto service provider and BitGo competitor Paxos Trust Company.

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Author: AnTy

PayPal: Society has Reached an Inflection Point, Moving From Physical Cash to Digital

Paypal, the payment processing giant, has recorded another strong quarter with $5.26 billion in the second quarter of 2020 and added 1.7 million merchants to its ecosystem. Paypal executives got on a call recently to discuss the future of cash, and during their discussion, they noted that society had reached an “inflection point” post COVID-19 outbreak.

The executives on the call claimed that almost 70% of their customer base now fears for their health when it comes to paying in cash as it requires physical contact. This is understandable given the coronavirus pandemic has not only brought businesses to a halt, but it has also created a sense of fear among common masses over physical contact.

John Rainey, CFO of Paypal, believes the fear of physical contact has accelerated e-commerce and contactless payment by many years in just one quarter.

PayPal owned Venmo has also seen explosive growth as the total number of users reaching 60 million users. The increase in the use of Venmo is a big boost for PayPal’s plan to become the leader in the digital payment arena. Venmo was earlier used just for splitting bills, but in recent times the use case has expanded to a broader domain.

Paypal to Invest Heavily to Improve its Digital Wallet

Paypal being the payment and remittance giant does not want to miss out on the changing times and the changing dynamics in the payment arena. This is the reason they have decided to invest in their digital wallet service to ensure it is the go-to digital wallet for consumers. Paypal is also promoting the use of a QR code-based payment option through its merchants and Venmo app.

Paypal revealed that they are expecting to grow their revenue by 25% for the rest of the year.

They have also decided to finally venture into the digital asset offering through its platform, which the company has sidelined for quite some time. The payment giant has partnered with Paxos to avail of the purchase of digital assets from within the app.

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Author: James W

Bitcoin to Roar Higher on PayPal Selling BTC? Time to Buy the Rumor

Yesterday, the news of fintech giant PayPal planning to roll out cryptocurrency buying and selling for Paypal and Venmo got the crypto market excited, and bitcoin went up to $9,800.

Reportedly, the company plans to build in wallet functionality for users to store their crypto in the app as well. The service could be rolled out as soon as in the next quarter.

To source liquidity, Coinbase, which has a relationship with PayPal going back to 2016 and Bitstamp, are the likely contenders.

The 300 million users base of PayPal is the reason behind this excitement as the online payments company would immediately broaden the potential investor base of cryptos. Also, Venmo comes with 50 million users, the largest consumer finance application in the US.

PayPal is also the company that froze WikiLeaks accounts, which then went the Bitcoin route. So, “It only took a decade for this to come full circle,” said developer Jimmy Song.

PayPal supporting Bitcoin no doubt will be “amazing for adoption,” but Jesse Powell, CEO of crypto exchange Kraken, warned, “don’t expect PP to change their policies on account closures. They’re still a centralized choke point, and the government will continue to commandeer the financial system for extrajudicial sanctions. Not your keys.”

On being countered by crypto exchanges being the same thing, Powell advised, “don’t leave more coins on Kraken than you need for your activity,” either.

“If we get a legit government order to close your account and hand over the coins, you can say goodbye to your precious savings. Great thing about crypto is you can self custody,” Powell said.

“Buy the Rumor, Buy the News, Sell the Implementation”

For now, the news of PayPal and Venmo looking into selling crypto-assets directly to their customers is based on some industry sources, and there is no knowing if it will be true.

“Still, the headline itself is more than enough to add fuel to this massive risk-on rally. So in the words of Louis Jordan. … Let the Good Times Roll,” wrote analyst Mati Greenspan in his daily newsletter.

Though a rumor currently, speculation around Facebook launching Libra started similarly in February 2019. And when the social media giant announced the launch in June, “the market roared higher,” said economist and trader Alex Kruger.

He also pointed out how several pieces of news paid handsomely in the past two years in the crypto space. In 2017, ETF rejection, China banning bitcoin, CME futures launch, the likes of CFTC sending subpoena Bitfinex and Tether, and fake news of ETF confirmation was such news. Then in 2019, we saw the market reacting to Libra and Chinese President Xi Jinping supporting blockchain technology.

Instead of ‘Buy the Rumor, Sell the News,” the right thing to do is ‘Buy the News’ as well, and ‘Selling the implementation’ is best, he said.

“Crypto going mainstream! This would be massive and should help prices run over those pesky call sellers,” Kruger said.

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Author: AnTy

Online Payment Giant, PayPal, Kick-Starts Research Into Buying & Selling Crypto

The international payment service, Paypal, has announced plans for a direct sales solution of cryptocurrency for its more than 325 million users.

This report is according to a few people that are familiar with Paypal’s activity. For the moment, Paypal is primarily known as an alternative payment provider worldwide, allowing users to make and take payments globally. Paypal’s previous relationship with cryptocurrencies offers users a means of withdrawing funds from crypto exchanges like Coinbase.

According to one of the individuals familiar with this activity, Paypal’s crypto service would allow users to buy and sell crypto directly through its platform. The source goes on to explain how Paypal would make use of a dedicated soft wallet.

While this announcement comes with a lot of speculation, it remains unclear as to how many, or even what cryptocurrencies would be available for users.

The timeline for development may be shorter than we think, another source claims. The user confirmed that Paypal would be looking at other exchanges for sourcing liquidity as well as crypto assets. All of this currently has a timeline of fewer than three months.

At this moment in time, Paypal has refused to comment. Major exchanges like Coinbase and Bitstamp also join the international payments provider in declining to comment.

While Paypal has had little direct experience with crypto-assets, it has had a long working relationship with the California-based Coinbase. For example, Paypal worked with Coinbase to offer instant fiat withdrawals back in 2018 for customers in the United States. In 2019, this was followed by the expansion of these withdrawals to both the European Union and Canada.

Crypto Trading and Fintech – A Winning Combination

While the market is experiencing some understandable uncertainty, fintech companies that expand into the crypto space are capitalizing well. For example, Jack Dorsey’s Square, the digital payments provider, introduced support Bitcoin purchases in mid-2018. As a result of this, Square’s Cash App reported more than $305 million in new revenues from BTC.

Revolut, meanwhile, rolled out support for crypto-assets off the back of a partnership with Bitstamp back in 2017. This was followed up by a successful raising of $500 million in seed capital in February this year – bringing its total market valuation to $5.5bn. Last, but not least is Robinhood, which was previously tipped to be behind the boom in equities day trading. Robinhood began offering access to cryptocurrencies back in February 2018.

What these companies do prove conclusively, and consistently, is that introducing access to cryptocurrencies is an effective way of bolstering user numbers, and earning some additional popularity.

Paypal is Staffing up

Paypal has begun 2020 on a very bullish note with a large number of new job openings. These are seen as a strong ramp-up for its brand new Blockchain Research Group. The giveaway comes from the posting of eight engineering positions across San Jose in California and Singapore.

In the wake of Facebook’s turbulent and ill-fated venture with Libra last year, and Paypal’s short-lived partnership with it, the company appears to be going its own way on blockchain and cryptos.

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Author: James Fox

Vodafone Becomes 8th Company to Leave Facebook’s Libra Association

  • Other companies to already leave Facebook’s digital currency endeavor include PayPal, MasterCard, and Visa.
  • Vodafone and Facebook have not released any further comment.

The Libra Association is been the subject of much turmoil since releasing the white paper for it’s digital currency, receiving criticism from lawmakers and regulars around the world. In spite of this, the association has pressed on, managing to initially secure 28 corporate backers to lead the way. Unfortunately, this group has already bid farewell to seven companies, and Vodafone has become the eighth to follow suit.

A statement from the Libra Association confirmed this change, and says, “We can confirm that Vodafone is no longer a member of the Libra Association. Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient. The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”

BitcoinExchangeGuide has already reported on other backers to have already left the association, including PayPal, Visa, MasterCard, eBay, Stripe, Booking Holdings, and Mercago Pago. Vodafone left on Tuesday, January 21st, and will instead use their resources for M-Pesa. M-Pesa is a pre-existing digital payment service that Vodafone already uses, and it presently serves six regions in Africa.

When Facebook’s project was originally announced, backers were expect to support it with $10 million in investments. However, that statement was made far before their backers started pulling themselves and their resources from the project.

Jerome Powell of the Federal Reserve shed some light on the concerns held by regulators, commenting that Libra introduces “serious concerns regarding privacy, money laundering, consumer protection, [and] financial stability.” A working group has since been created by Powell to investigate the concerns.

At this time, neither Facebook nor Vodafone has responded to requests for additional comments.

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Author: Krystle M

Massive Lawsuit Brought Against Consumer Financial Protection Bureau by PayPal

  • PayPal says that the regulations implemented by the CFPB force them to make “misleading and confusing” disclosures to customers.
  • The payment processing firm is asking to be compensated for the attorney fees and cost of taking this case to court.

PayPal is one of the biggest payment processors in the world, and they’ve served millions of customers on various merchant websites. However, they have recently gotten involved in a lawsuit against the Consumer Financial Protection Bureau. According to PayPal, the CFPB has required them to make disclosures about its fees with “misleading and confusing” statements.

The lawsuit, which was filed on December 11th by PayPal, states that the agency seems to be unclear on the substantial ways that digital wallets and prepaid products (like their prepaid debit cards) differ. A court filing revealed to CoinTelegraph shows that the CFPB requires both digital wallets and prepaid products to be regulated under the same rules. However, this type of regulation for the digital wallets that PayPal offers is “fundamentally ill-suited,” as PayPal states.

Within this lawsuit, there’s a specific CFPB rule in question – “Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) Rule.” The rule was originally implemented in April this year, and it states that PayPal must provide users with a disclosure on the fees that are not charged by the company. PayPal claims that the rule also doesn’t properly demonstrate what most customers actually pay for their fees.

Essentially, the rule states that the descriptions of these fees on PayPal that “undermine PayPal’s own clear disclosures” need to be simplified. Furthermore, the rule bans them from offering information to consumers that would otherwise allow them to make “an informed decision,” and instructed the firm to tell their customers the worst possible fee that they may come up against, “even if the fee would rarely be incurred.”

In the filling, PayPal added, “The Rule mandates that customers be given — and actually view — ‘short form’ fee disclosures. The requirements for this short form disclosure are extremely prescriptive and rigid. Certain fee categories must be placed in specified positions and presented in certain font sizes […] The Rule further prohibits PayPal from including explanatory phrases within the disclosure box to describe the nature of these fee categories.”

Along with the petition for the ruling by CFPB to be deemed unconstitutional, the push to relieve them of it also asks that PayPal be awarded the costs and attorney fees by the court, as they deem appropriate.

Andrew Rossow, an internet attorney from Ohio, said that the lawsuit from PayPal makes it clear that there are many regulators – CFPB included – don’t actually understand the new technologies being launched in the industry today, like blockchain, artificial intelligence, and others.

Rossow added, “I think the CFPB’s recent expansion of Regulation E (Prepaid Accounts Under the Electronic Fund Transfer Act) and Regulation Z (Truth in Lending Act) was premature because it still doesn’t understand, in my opinion, how these digital wallets (which includes cryptocurrency wallets—hot and cold) operate and the parties that involved in even the most ‘basic’ of digital money transactions.”

If the court sides with PayPal, the progress could be huge for the cryptocurrency industry. After all, PayPal isn’t just standing up for itself – it is “defending the business operation of each of its competitors, protecting themselves from unwarranted and almost endless liability at any given point in time,” says Rossow.

PayPal has recently revealed their substantial quarterly profits and has been recording new users and more transactions. However, the platform recently cut some of their partnerships, including their ties to Pornhub and their models.

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Author: Krystle M