Paypal Inc, the global payment giant decided on the 21st of October to announce to the world its intentions to welcome cryptocurrencies for over 300+ million users worldwide. This marks a huge turning point in the journey to mainstream adoption for Bitcoin and other altcoins. The global media has been rattled with this unexpected news and has thus raised a lot of positive vibes for the brand since.
Paypal Partners with Paxos, Bringing an Opportunity to U.S. Citizens
Paypal is the first of its kind to be granted a Bitlicense by the New York State Department. Many view this as a significant achievement for the crypto market and a huge advancement on its journey to becoming a mainstream currency. According to the press release, Paypal will allow its users to buy, hold, and sell cryptocurrencies directly from their account. However, for the initial rollout, Paypal will open this service only for its users in the U.S. According to Paypal, they plan to support Bitcoin, Ethereum, BitcoinCash, and Litecoin from early next year. Support for more cryptocurrencies is to be expected in the future.
PayPal has partnered with Paxos for crypto trading and custodial services. Paxos is a regulated financial entity enabling safe and responsible movement between physical and digital cash.
“Paxos is pleased to partner with PayPal to support their entry into the cryptocurrency marketplace,” says Charles Cascarilla, CEO of Paxos.
In addition to allowing its users to buy and hold cryptocurrencies, Paypal expects to provide them the opportunity to use crypto as a funding source for their transactions across Paypal’s 26 million merchant network.
Will Taxes be Charged for Crypto Payments on Paypal?
With Paypal opening up the floor for US citizens to buy and hold cryptocurrency, a question that was raised by many was whether their purchases will be subject to taxes.
According to Shehan Chandrasekera, head of tax strategy at Cointracker.io each time a user converts their crypto to fiat in order to pay for goods & services offered by a merchant that user will have a tax obligation. The users would be subject to many different taxes including taxes on long-term capital gains. This would mean that users would need to keep detailed records of their crypto transaction history such as the price at which they bought the coins, how long they have kept them on hold, the price of the coin at the time of converting to fiat, etc to accurately file their taxes.
The company has also updated its fee structure for the upcoming crypto exchange rates. It has clearly stated in its new Terms & Conditions, that the responsibility for filing taxes lies with Paypal users themselves.
“It is your responsibility to determine what taxes, if any, apply to transactions you make using your Cryptocurrencies Hub. You can access your transaction history and account statements through your PayPal account for purposes of determining any required tax filings or payments”.
Is Acquiring Bitgo Paypal’s Way Of Showing That They’re Here To Stay?
Both parties have declined to make official comments on the status of the negotiations. If the discussions go south, Paypal will look for alternate options immediately. Irrespective of the outcome, one thing is clear. Paypal is here to stay in the crypto marketplace. Just days ahead of the 2020 U.S election, what does this symbolize for the future of cryptocurrencies?