PayPal has at last permitted customers to transfer their cryptocurrency to alternative wallets

Customers have been asking for this functionality for some time, and PayPal has now responded to demand by announcing that its users will be able to transfer cryptocurrencies from their accounts to other wallets and exchanges. Customers will be able to send supported coins into PayPal, move crypto from the app to external crypto addresses including exchanges and hardware wallets, and send cryptocurrency to other PayPal users "in seconds." When customers use their PayPal account to send money outside of the PayPal network, they are responsible for any associated fees, which are determined by the blockchain and change depending on the cryptocurrency. There are no costs associated with internal transfers - payments from one PayPal account to another.

“This feature was the most demanded from our users since we began offering the purchase of crypto on our platform,” said Jose Fernandez da Ponte, SVP and general manager of blockchain, crypto and digital currencies at PayPal.

PayPal allowed its customers to buy, sell, and store cryptocurrencies in October 2020. Then, in late March 2021, PayPal announced the availability of Checkout with Crypto, a service that enabled consumers to pay for items using cryptocurrency at millions of online retailers. That feature built on PayPal's current investments in the cryptocurrency sector, including its collaboration with Paxos to power its service that permits consumers to buy, sell, and store a variety of digital currencies and its acquisition of security firm Curv.

“If users have crypto somewhere else and want to consolidate, they can bring it to PayPal from external addresses,” Fernandez da Ponte. “They can also send crypto to anyone who is in the PayPal system.”

PayPal's decision to allow customers to move their cryptocurrencies, such as bitcoin, Ethereum, Bitcoin Cash, or Litecoin into, outside of, and back into PayPal is unavoidable if the firm wants to keep up with the continued crypto adoption and avoid being seen as behind the times in a fast-changing fintech environment. Despite recent volatility in the cryptocurrency market, Fernandez da Ponte stated that PayPal will proceed with this course "as individuals are still adopting cryptocurrencies."

For security reasons, PayPal has announced the rollout of a new capability that is only accessible to customers in the United States. Because of security concerns, PayPal has implemented an extra identification verification procedure for users before they can send any cryptocurrency. The roll-out will be gradual, with select US residents being able to do so today and other "eligible" US consumers - those who complete the identity verification procedure - joining them in the weeks ahead. PayPal was able to offer the new functionality after transitioning from a “conditional” BitLicense to a “full” one following approval from the New York Department of Financial Services.