Paypal Expands Operation to Include Cryptocurrency Exchange
Paypal Holdings Inc, the world’s leading online payments solution, has finally expanded its operations to include cryptocurrency exchange following months of planning.
The company customers will now be able to buy, sell and hold bitcoin and other crptocurrencies using the PayPal digital payment wallets.
PayPal move was after the company’s competitor, Square, expanded into cryptocurrency exchange space in 2018 and developed a wallet that support bitcoin transactions through its Cash app. However, PayPal took it a notch higher by developing wallet that support Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
The decision to venture into cryptocurrency exchange space would boost the attractiveness of the unregulated digital asset and further push it to the mainstream given the fact that PayPal present has 346 million active users accounts with 26 million merchants.
“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,” PayPal CEO Dan Schulman said in a statement. “Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.”
Schulman says PayPal is “eager to work with central banks and regulators around the world” in supporting cryptocurrency.
Please note that PayPal users can only transact in cryptocurrency using fiat currency without ability to withdraw their purchased digital asset to a third party wallet or transfer from third party wallet into their PayPal powered wallet. Meaning PayPal users can only purchase PayPal cryptocurrencies and transact within the platform.
ASIC Chairman Alludes to Holes in Digital Assets Custody Solutions
Australian Securities & Investments Commission (ASIC) Chairman Joe Longo, speaking at the AFR’s Super & Wealth Summit, made news Monday when he noted that crypto “investors are on their own.” The rest of his quote speaks to the country’s regulatory situation, saying that “ASIC has already provided some guidance on exchange-traded funds linked to crypto-assets — they at least are financial products, and traded on a licensed exchange, so there will be some protections there. But for the most part, for now at least, investors are on their own.” In combination with other parts of his speech, many wondered if it was a critique of the industry’s custody solutions.
“Mr. Longo walks an interesting tight rope, acknowledging the current regulatory components associated with exchange-traded funds linked to digital assets, while other officials speak of the power of blockchain technology. But then he juxtaposes that with the innate risk which investors are taking when dealing directly with crypto. It is an interesting position, but not one which is surprising, given the current state of custody solutions,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“While investors are protected in Australia when buying defined ‘financial products,’ many digital assets are not considered a ‘financial product’ and, thus, investors are not protected in the event of malfeasance. At the same time, Australian Financial Services Minister Jane Hume noted that digital assets weren’t a ‘fad’ and that citizens shouldn’t be ‘fearful of the unknown.’ Taken together, those can be complex messages to parse,” said Gardner.
Longo’s comments, in part, included the following:
“ASIC is [not] here to eliminate risk… But where industry has neglected to take its share of responsibility, ASIC will not hesitate to deploy the powers in our regulatory toolkit – to deter misconduct that causes harm, hold to account individuals and corporations that treat their responsibilities as optional, and drive a culture of better corporate behaviour… By enforcing the law against those who break the rules, we support those who want to do the right thing.”
“From the commentary, we can assume that the ASIC is looking at ways to create compliance measures while not indemnifying investors when exchanges falter. Therein lies the industry opportunity. Custody providers are supposed to fill that role, safeguarding assets in between the time that an investor purchases and is ready to sell. However, custody providers, as well as exchanges’ appropriate use of such providers, have turned out to be woefully inadequate. The market yearns for a secure solution which allows investors to purchase digital assets with confidence. Better custody solutions, used appropriately, would significantly reduce the number of headlines made by hackers,” noted Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Assets sitting in exchange accounts aren’t nearly as secure as assets sitting in cold storage. Custody solutions should be developed with institutional-grade security features, making hacks and other attacks impossible. However, a quick Google search of current top providers will show that they are riddled with security flaws. That’s not custody that investors can believe in. There must be a consequential shift in custody for crypto to flourish to its fullest potential,” opined Gardner.
Elon Musk Confronts Binance CEO Over Dogecoin Glitch
Tesla CEO Elon Musk has challenged the Binance Chief Executive Changpeng “CZ” Zhao concerning the cryptocurrency’s exchange issues surrounding dogecoin withdrawal.
Elon Musk had embraced dogecoin, a meme-based coin, earlier this year and consistently tweet about the coin to his over 52 million followers at the time.
This bolstered dogecoin’s value to $0.7 a coin and pushed its market capitalisation to the top ten most valuable cryptocurrencies. The coin has now added a very impressive 6000% to its value compared to this time last year.
In early November 2021, Binance – which holds the spot as the world’s biggest cryptocurrency exchange according to volume – temporarily held off on any dogecoin withdrawals after an upgrade which led to Binance users claiming that dogecoin had been mistakenly credited to their accounts.
Elon Musk took to Twitter yet again to address CZ Zhao about the dogecoin situation, saying in his tweet that the situation “sounds shady”. Elon Musk posted this tweet in reply to a Coindesk report about Financial Times where CZ said that he’s looking to improve regulators’ views on Binance.
Musk went on to add that the doge holders who use the exchange should be secured from any errors that were not their fault.
After the upgrade glitch, Binance said all the dogecoin sent in error must be returned by the users, or else they will be unable to withdraw or use the funds on their balances. Forbes however reports that users have claimed they do not have the said dogecoin in their Binance accounts.
CZ replied Elon Musk, saying there is a certainty that the issue is with the latest doge wallet, and they have been communication with the developers. CZ went ahead to apologise for any inconveniences caused.
Elon Musk’s tweet prompted the Binance Twitter account to post a thread that explained the situation and the issue with dogecoin withdrawals. Binance has since updated a blog post, stating that it expects dogecoin withdrawals to be temporarily halted for about two weeks.
IMF Discourages the Use of Bitcoin as Legal Tender
Global financial body, the International Monetary Fund has informed the public that bitcoin constitutes a high risk to consumers.
In giving this warning, the Monetary Fund made a reference to El Salvador’s recently announced plan to make the coin a legal tender, as the country sets plans to erupt a Bitcoin City which is funded by cryptocurrencies.
On Monday, the IMF released a statement where it referred to the decision made by El Salvador to make bitcoin a legal tender as risky. This was said in spite of the Fund’s admission that cryptocurrencies and other digital forms of money possess the potential to make payment systems much more efficient.
According to the financial body, bitcoin’s high rate volatility means its use as a legal tender opens up serious risks to financial integrity, consumer protection and financial stability. The body then encouraged the strengthening of the supervision and regulation of the new payment system.
In September 2020, El Salvador passed a law that granted bitcoin the status of an official legal tender side by side with the US dollar. This made El Salvador the first country in the world to recognize cryptocurrency officially.
Since then, El Salvador’s government has supported an e-wallet system known as Chivo, which allows El Salvador residents to engage in payments with bitcoin and convert the cryptocurrency to US dollars.
The financial body recognized the benefits of the system, which could augment financial inclusion, while supporting financial growth. The body however called for more legal defences for consumers, to protect them while countering money laundering and the financing of terrorism.
This warning arrived merely days after El Salvador revealed its plans to build the world’s very first ‘Bitcoin City’ which will receive its initial funding from bonds backed by cryptocurrencies. The city will contain commercial and residential areas, airports, restaurants, entertainment venues, and other amenities which are common to a metropolis.
It is still in the conceptual stage but the first bond offering is set for 2022, with construction to begin about two months after financing has been secured for the construction.
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