PayPal is to allow users in Britain to buy and sell Bitcoin and other cryptocurrencies, making it among the largest companies to embrace the controversial virtual assets in the UK.
The company’s service will enable customers to choose from four types of cryptocurrency: Bitcoin, Ethereum, Litecoin and Bitcoin Cash, which they will be able to buy, hold and sell from later this week.
It comes amid a wild ride for cryptocurrencies this year that has seen Bitcoin’s price climb to an all-time high before falling by almost 50pc and rebounding in recent weeks.
However, the surge has led to warnings from financial regulators, with the Financial Conduct Authority (FCA) telling investors that they should be prepared to lose their money.
PayPal allowed American users to buy and sell cryptocurrencies last year, and the UK is the first market outside the US where the company has launched the feature.
Unlike the online exchanges where people buy and sell cryptocurrencies – virtual assets that reside on an online database known as the blockchain – PayPal will not give users direct access to the coins, which will be held by Paxos, a US cryptocurrency company. This means they will not be able to spend the coins or transfer them outside PayPal.
However, by giving them exposure to the coins’ price, it could open up cryptocurrency to a new wave of existing customers who are yet to dabble in Bitcoin.
Jose Fernandez da Ponte, head of digital currencies at Paypal, said: “Crypto can be an intimidating environment, people hear about hardware wallets and private keys and this and that. So for people who want to have their first experience, they have that conduit of doing it through us.”
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The company has not said how many of its 403m accounts are in the UK, but the country accounts for just over 10pc of its revenues.
PayPal said it would include “educational content” warning of the risks of investing in cryptocurrency within its app, and said it encouraged customers to research it before investing. Users will also be limited to £15,000 per transaction, and £35,000 per year.
The FCA has taken a tougher stance on cryptocurrencies in recent months as more consumers have invested. It has repeatedly warned investors that the assets are risky and cracked down on brokers including the UK arm of cryptocurrency giant Binance.
Paypal’s European operation, based in Luxembourg, is licensed by the FCA and said it did not need extra approval to launch cryptocurrency trading in Britain.
Financial technology companies such as Revolut, Square and Robinhood have added Bitcoin trading in an attempt to cash in on surging interest from retail investors.
After adding cryptocurrency investing in the US late last year, PayPal’s transaction revenues – the cut it takes on certain payments including cryptocurrencies – rose by 33pc in the first three months of 2021.
The company has said that users who have invested in cryptocurrency more regularly open the PayPal app, making them more likely to use other services such as paying through the app or sending people money.
Bitcoin has traded just under $50,000 recently, up from around $11,500 a year ago.