PayPal on Wednesday announced a new feature that will allow users to buy, hold and sell cryptocurrencies, becoming the latest large financial services provider to show an interest in the space.
The company said in a press release that its new cryptocurrency service would launch in the U.S. in the coming weeks and will initially feature bitcoin, ethereum, bitcoin cash and litecoin. By early 2021, the company also plans to let customers use crypto to shop with its network of 26 million retailers.
Shares of PayPal climbed over 3% in early New York trading. Bitcoin's price meanwhile rose almost 5% to trade at around $12,440, according to data from CoinDesk.
"The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly," PayPal CEO Dan Schulman said in a statement.
"We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce."
Central banks around the world have been exploring the idea of issuing their own digital currencies. Seven of the world's top central banks — including the Federal Reserve and European Central Bank — recently set out a framework for how such a system could work. Meanwhile, the People's Bank of China has been forging ahead with trials for its own proposed digital currency.
To launch the feature, PayPal said it had teamed up with cryptocurrency start-up Paxos. The firm added that it has been granted a conditional virtual currency license from regulators in the state of New York. It plans to roll out the crypto features to its Venmo mobile wallet and international markets in the first half of 2021.
The announcement comes as more financial institutions signal their entry into the nascent cryptocurrency market. Twitter CEO Jack Dorsey's financial technology firm Square has long offered cryptocurrency services, and recently bought $50 million in bitcoin, while investment manager Fidelity set up its own crypto division last year.
It also highlights an effort from firms to offer use cases for crypto other than speculative trading, like e-commerce and payments. Bitcoin and other cryptocurrencies have gained a reputation for wild price swings — bitcoin notoriously climbed close to $20,000 in late 2017 before plummeting the following year. It currently trades at more than $12,400 and is up over 70% year-to-date.
Elsewhere in the space, Facebook and a number of other tech companies are working together on a digital currency called libra that they hope will enable cheaper and faster cross-border payments. The project faced a backlash from policymakers last year and its backers have had to change tack with their monetary model to appease regulators.