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PayPal CFO Says Company is Unlikely to Invest Cash in Cryptocurrencies

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PayPal CFO Says Company is Unlikely to Invest Cash in Cryptocurrencies

PayPal is not likely to buy digital currencies like bitcoin, though the company does see immense opportunity in the digital wallet space.

In an appearance on CNBC’s “Mad Money” Thursday, PayPal Chief Financial Officer John Rainey said the payments giant has no interest in buying cryptocurrency, instead preferring to invest in services that are additive to the platforms it offers.

“We’re not going to invest corporate cash, probably, in sort of financial assets like that,” he said in response to an inquiry from the show’s host, Jim Cramer, “but we want to capitalize on this growth opportunity that’s in front of us.”

The company has acknowledged that it believes the transition to digital forms of currencies is inevitable. In December, PayPal CEO Dan Schulman called digital wallets a “natural complement to digital currencies” and said the company serves 360 million digital wallets.

PayPal does have exposure to the crypto market. In October, the company announced that it would allow users to buy, hold and sell cryptocurrencies, including bitcoin, ethereum, bitcoin cash and litecoin. Users can also shop with the digital coins in PayPal’s retail network.

Venmo, the mobile wallet owned by PayPal, is expected to begin offering the same services in the first half of this year. The features will also be extended to international markets.

PayPal plans to invest its money in companies that provide “complementary assets to our platform” that can drive growth, Rainey said. The company also announced Thursday it would introduce its buy, sell and hold crypto services to the United Kingdom in the near future.

“The types of services that we’re providing, like buy now, pay later [and] crypto as an example — even offline QR code — those are the types of things that we want to continue to invest in, be it organically or even inorganically when we see opportunities in the ecosystem,” he explained.

Buy now, pay later is a point-of-sale loan program that works much like layaway plans, allowing shoppers to pay for products via an installment plan with no interest or fees.

The crypto comments come as activity in crypto markets has picked up this year. Tesla made a splash earlier this week when the company disclosed that it purchased $1.5 billion worth of bitcoin and would also begin accepting the currency as a form of payment from customers. That followed a surge in interest for dogecoin, the digital coin that was blessed by Tesla CEO Elon Musk on his Twitter page.

Tesla’s move to invest in bitcoin sparked wonders in the investment community if other companies would follow in the carmarker’s footsteps. Earlier Thursday, Uber CEO Dara Khosrowshahi said that the topic was discussed but that the company ultimately declined to invest in the digital currency.

Schulman, who appeared alongside Rainey in the “Mad Money” interview, said PayPal grew free cash low by 48% in 2020 to $5 billion. He forecasts the company will generate $10 billion of annual free cash flow by 2025.

PayPal will be a consolidator in the financial technology industry, he said.

“We want to use that cash. We want to use our balance sheet as a strategic weapon,” Schulman said. “That may be returning cash to shareholders and it may be through acquisition, but every one of those dollars matter to us and we really take our capital allocation quite seriously.”

Last month, PayPal made its first acquisition since announcing in late 2019 that it would buy coupon aggregator Honey Science for $4 billion. PayPal took 100% control of the GoPay payment platform, which is based in China, in a deal that closed on Jan. 11.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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PBOC Instructs China’s Banks to Forbid All Cryptocurrency Related Activities Immediately

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China’s central bank has sent notice to the country’s financial institutions instructing them to stop dealing with cryptocurrency transactions.

The disclosure notes that the People’s Bank of China (PBOC) aims to protect Chinese citizens and “combat the speculation of Bitcoin and other virtual currency transactions.”

On June 21, 2021, the People’s Bank of China (PBOC) issued a notice to a number of financial institutions concerning crypto transactions.

The PBOC says it has discussed the issue of cryptocurrencies with financial services firms like the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank, and the Alipay (China) Network.

The PBOC stressed that “virtual currency trading activities disrupt the normal economic and financial order, breed the risks of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe the people’s property safety.”

China’s payment institutions and banks must implement strict guidelines on “bitcoin risks,” “token issuance financing risks,” and other regulatory requirements the PBOC notice details.

Financial institutions “must not provide account opening, registration, and registration for related activities,” the central bank added.

China’s Postal Savings Bank followed up with a statement and explained that it will not allow cryptocurrency transactions in any manner.

“According to relevant regulations of the People’s Bank of China, no institution or individual may use our bank’s accounts, products, services, and channels to conduct token issuance financing and ‘virtual currency’ transactions,” China’s Postal Savings Bank said.

The Postal Savings Bank also said if Chinese citizens notice crypto activity or any virtual currency “related behavior, you can report it to our bank.”

The PBOC news follows the June 20 mandate from Sichuan officials that banned bitcoin mining in the region. Since the banning in five major Chinese provinces, Bitcoin’s hash rate has plummeted to 100 exahash per second (EH/s).

Chinese journalist Colin ‘Wu’ Blockchain also tweeted about the PBOC notice on Monday and said two other financial institutions released statements concerning the subject. “The Agricultural Bank of China once again released the deleted webpage, and Alipay also issued a related statement,” the regional reporter said.

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Microstrategy Buys $489M Worth of Bitcoin —Now Holds 105,085 BTC

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The independent, publicly traded business intelligence company Microstrategy announced the acquisition of 13,005 bitcoin on Monday, at a purchase price of approximately $489 million in cash.

The company’s CEO Michael Saylor revealed the latest purchase on Twitter, and the firm now has more than 100,000 bitcoins on its balance sheet.

Michael Saylor’s firm Microstrategy now has approximately 105,085 bitcoins which it bought for around $2.741 billion. Using the purchasing average, the company says it purchased all the BTC at around “$26,080 per bitcoin, inclusive of fees and expenses.”

As usual, Microstrategy CEO Michael Saylor tweeted about the purchase telling his 1.2 million Twitter followers. “As of 6/21/21 we #hodl ~105,085,” Saylor noted on Monday morning.

Not everyone was impressed with Microstrategy’s bitcoin buy announcement and a few people like Peter Schiff made snide comments. “That’s pretty bearish that you already bought all that bitcoin and the price kept dropping anyway,” Schiff replied to Saylor’s tweet on Monday.

“Consider where the price of bitcoin would be today if Elon Musk, Michael Saylor, Barry Silbert, and all the other bitcoin elites and their friends in the financial media hadn’t spent the last six months convincing retail and institutional investors to buy their worthless tokens,” Schiff said the day prior, as bitcoin’s price began plummeting.

Northman Trader’s Sven Henrich also responded to Saylor’s announcement. “Understand the conviction. Question though: As the price average and employed leverage have both been rising what’s the risk profile/consequence if bitcoin were to drop below the average holding price?” Henrich asked the Microstrategy CEO.

When someone asked Henrich if Saylor’s choice turned out to be a good bet the Northman Trader further commented. “Not saying he’s wrong,” Henrich replied. “Just asking what the risk profile is if [the] price drops below the average holding price.”

Microstrategy’s purchase of 13,005 BTC follows recent news stemming from China’s central bank. On June 21, 2021, the People’s Bank of China (PBOC) issued a notice to a number of financial institutions concerning crypto transactions.

Since then, BTC has dropped 4 percent in 24 hours and rests just above the $32K handle. In other words, the price has actually dipped below the price Microstrategy paid per coin for this most recent BTC acquisition.

Other bitcoin proponents also responded to Saylor’s tweet. “Time to deploy the next billion,” software developer Jameson Lopp tweeted. An individual commented on Lopp’s statement and jokingly said: “Fixed it: Time to deploy the next borrowed billion.”

“Unfortunately, contrary to popular belief one just can’t keep infinitely buying the dip,” an individual said to the many enthusiasts telling the Microstrategy CEO to “keep buying the dip.”

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The US Government Auctions $377K Worth of Bitcoin and Litecoin

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The U.S. government sold Bitcoin and Litecoin worth $377K via the General Services Administration (GSA). The auction closed at 5 p.m. on Monday. The government auction house has sold digital assets in 11 lots and so far, the lots have seen active bidding.

From June 18 to Monday, June 21, the General Services Administration, otherwise known as the GSA, auctioned two types of crypto assets. GSA auction bidders buy 11 lots of crypto that hold approximately 8.93 BTC and 150.2 LTC.

The U.S. government estimates the value to be in the ballpark of $377,000 for the aggregate BTC and LTC lots. The GSA announcement notes that the entity has sold crypto assets on behalf of the U.S. government since the beginning of 2021.

To date, the GSA has auctioned crypto assets three times and sold 16.99 BTC in total. The three previous GSA auctions settled at $937,092 for the bitcoin assets sold on the platform. The GSA advertisement also tries to entice the reader by saying: “Become a part of the growing cryptocurrency community by placing a winning bid during GSA Auctions’ next cryptocurrency sale.”

“Experienced investors recognize a good opportunity when they see it, which is why our auctions have generated so much enthusiasm among the crypto community,” Thomas Meiron, Regional Commissioner for GSA’s Federal Acquisition Service said in a statement. “With the addition of a new type of cryptocurrency, this promises to be one of our most exciting auctions of the year.”

The new type of digital asset Meiron refers to is Litecoin (LTC), as prior auctions only saw the sale of BTC. The GSA was created in 1949 and is a solution for government-owned surplus, forfeited goods, and federal personal property they no longer require.

The independent agency of the U.S. government allows the general public, businesses, and other government agencies to bid on items in an exclusive fashion. Local and international GSA auction buyers are mandated to purchase electronically.

The electronic only-purchasing arrangement is due to the President’s declaration of a national emergency on March 23, 2020. Since then, the GSA no longer accepts payments made by cash, money order, cashier’s check, and official or personal checks.

The description of the crypto lots being sold explains that when a bidder wins they must accept the responsibility of paying the mining network fee. Bidding has been active so far and dozens of offers have been made on the GSA’s current stash of digital assets.

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