With the launch of its cryptocurrency services by financial technology (fintech) company PayPal, around 350 million PayPal account holders have gained access to them, Cointelegraph announced.
According to the publication, customers need to log into their PayPal account if they need to have funds available through their credit card, debit card, or bank account. The fintech company asks customers to comply with Know Your Customer (KYC) verification and anti-money laundering measures, which require them to submit certain documents, including a W-9 tax form.
Findings from the publication said that the fintech company offers a low-risk approach to cryptocurrency asset ownership. Newly introduced cryptocurrency users who have low risk tolerance receive benefits. Additionally, PayPal incentivizes users through partnerships with various stores to allow users to purchase products and services with their cryptocurrency holdings.
The publication’s data mentioned the cautions that users must be aware of before purchasing cryptocurrency assets from PayPal:
Users must go through a similar approval process with cryptocurrency exchanges
Cryptocurrency exchanges require their customers to go through the same approval process before signing up. Therefore, users should buy cryptocurrency directly from an exchange instead of the PayPal platform.
Users hold their fiat equivalent, not cryptocurrencies
PayPal does not allow users direct access to their cryptocurrency. The platform does not provide a way to provide a digital wallet or a wallet address. When users withdraw their cryptocurrency, liquidity is only available to them via fiat currency. As a result, users cannot transfer bitcoins to PayPal.
Users cannot lend their cryptocurrencies
PayPal does not allow users to generate passive income through their cryptocurrencies intending to maximize their returns, while smart contracts allow for the elimination of third parties from financial transactions.
Users can experience fewer fees when exchanging cryptocurrencies
PayPal charges hefty fees for its services, and cryptocurrency holdings are not expected to be kept out of its purview. Cryptocurrencies bought from an exchange may be more suitable for customers. Decentralized Finance (DeFi) can provide passive income opportunities such as B. Stakes to support a blockchain network, the provision of liquidity or yield farming by exchanges.
The choice is limited
PayPal only offers four types of cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash and Litecoin that are less susceptible to volatile price movements.
(With insights from Cointelegraph)
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