In October 2020, PayPal announced it would let its US-based users buy cryptocurrency via their accounts.
PayPal UK has now confirmed that, as of September 17, all eligible UK customers can now buy, hold and sell cryptocurrency using their account.
Here’s a look at PayPal’s cryptocurrency support, and how to buy crypto via PayPal.
How To Buy Crypto Through PayPal
To buy cryptocurrency, you’ll need to sign in to your PayPal account and go to the Crypto section.
Here, you will be able to choose between Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. PayPal will then ask about your US taxpayer status, and warn you of the financial risks associated with trading cryptocurrency.
UK users will then go through some KYC compliance checks. This includes entering your personal information and sending both proofs of identity and address.
After entering the necessary information, PayPal will then review the documents. If successful, you will be able to choose how much of the cryptocurrency to buy, and will then need to choose your payment method.
On its final review screen, PayPal will show you the transaction fee required for the purchase. After completing the transaction, your crypto assets will then appear in the Crypto section of your account.
What Cryptocurrencies Does PayPal Support?
As of September 2021, PayPal only supports four cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
In the press release announcing its cryptocurrency support, PayPal said:
To increase consumer understanding and adoption of cryptocurrency, the company is introducing the ability to buy, hold and sell select cryptocurrencies, initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet.
The word ‘initially’ does suggest PayPal could support additional cryptocurrencies in the future, but this is not guaranteed.
How To Use Crypto on PayPal
There is caveat to PayPal’s cryptocurrency support. PayPal lets its users “Buy, sell, and hold crypto” only. This means users do not have access to their private crypto keys, and cannot transfer their cryptocurrency holdings out of PayPal, nor can they use it to pay directly for goods and services.
In its Crypto FAQs, PayPal explains this decision, stating:
When you buy crypto on PayPal, we give you the rights to that crypto, but do not provide you with a private key. This helps us protect your holdings against hacks and other malicious attacks.
Instead, to use their holders, holders will need to sell their cryptocurrency, transferring it back into fiat currency. PayPal’s ‘Checkout with Crypto’ payment method (available in the US) does this automatically.
When PayPal’s crypto service went first went live in the US, this decision was met with backlash by veteran crypto holders, who repeated the mantra of ‘Not your keys, not your crypto’.
David Gerard, author of Attack of the 50 Foot Blockchain, raised similar criticisms of PayPal’s initiative, stating PayPal’s service “lets aspiring day traders gamble on four cryptos.”