PayPal's cryptocurrency entry required years of expertise-building - WSJ

Mar. 12, 2021 11:30 AM ETPayPal Holdings, Inc. (PYPL)PYPLBy: Liz Kiesche, SA News Editor2 Comments
  • PayPal Holdings' (PYPL -1.7%) move to allow U.S. customers to sell, buy and hold cryptocurrencies depended first on a years-long effort to recruit the right talent with expertise in the relatively young field of blockchain.
  • Also key to the effort: working with a trusted regulatory technology provider and having executive-level support, Edwin Aoki, chief technology officer for PayPal Blockchain, Crypto and Digital Currencies, told the Wall Street Journal.
  • In October, PayPal was the first company to get a conditional BitLicense from the New York State Department of Financial Services.
  • In 2016, crypto entrepreneur Wences Casares joined PayPal's board and started discussing with PYPL CEO Dan Schulman the potential for digital currencies to bring more people into the financial system.
  • The company assembled a research group dedicated to explore blockchain by late 2017. The team at first focused on fundamental research related to blockchain, without specifically concentrating on how PayPal could eventually use the digital ledger technology, Aoki said.
  • With digital payments being adopted more broadly last year due to the pandemic, PayPal considered it the right time to start using that research to develop a product.
  • The product product development effort required adding new hires to join PayPal's existing blockchain and crypto talent. Aoki wanted to make sure the new talent could easily explain what it would mean to buy, sell, and hold cryptocurrencies to its existing and new PayPal customers, through both its website and mobile app.
  • Meanwhile, PayPal's venture capital arm has also invested in blockchain and crypto-related startups, including TaxBit and Cambridge Blockchain, in the past two years.
  • Regarding the regulatory technology partner, PayPal is using Paxos Trust Co. to drive the back-end infrastructure that makes sure the cryptocurrency transactions comply with data privacy rules and financial regulations.
  • Paxos, founded in 2012, spent seven years getting the necessary regulatory approvals from federal and state agencies and international governments to hold and move people's crypto assets. It's continuing to work on more approvals, the company's CEO told the WSJ.

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