Don’t Believe the Hype Around Paypal Crypto-Currency

Written By Scott Cunningham, Posted on November 12, 2020

It is widely understood within the crypto space you must hold your own keys for true ownership and access. From everything I’ve seen, this is exactly what stock exchanges and fiat payment processors that have begun offering cryptocurrency trading are preventing.

As an example, there has been a lot of buzz over the recent announcement by Paypal saying they would begin offering cryptocurrency trading through their platform, but here’s the catch: they get to hold your keys and you can’t withdraw, or deposit at all. You also cannot spend your crypto, but they intend to give you this option through their network with their approval eventually.

According to this article, they plan to also let you pay for things through their network, but there are no promises or guarantees that you will ever be able to freely spend or withdraw your cryptocurrency. There’s no real debate this is a fact, seeing as you can find all this clearly on Paypal’s FAQ section.  

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A few key sections to examine are:

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So currently, you cannot send, pay with, or really use your cryptocurrency in any way other than holding it and speculating on the price.

This section  is important because here Paypal is saying they are planning to launch this next year, but with further inspection you can see they will only let you spend cryptocurrency you’ve purchased on Paypal at specific stores they allow within their approved network. Essentially, they are centralizing the control and usage of cryptocurrency through Paypal. 

This isn’t useful as you still have to fund your account with fiat currency and then be subjected to their approval for any purchase, an issue again clarified with the next FAQ & answer.

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The important thing to recognize here is your cryptocurrency usage is always subject to review and could be delayed or stopped. Again, they are centralizing the control by doing this and taking away the freedoms that cryptocurrency affords you when used outside of their network.


There are no fees currently, but there will be fees in 2021 of which they say will average to about 0.5%, but they will not actually disclose their earnings made on each transaction.

When any entity gains power or control over something, like over your funds let’s say, that entity has little reason to give that power back. Yes, they may let you spend what they allow, but you aren’t financially free or independent, which are core values in many cryptocurrencies. 

This move by Paypal must be seen for what it is: an attempt to centralize control of cryptocurrencies. Paypal is widely known and used, many first time traders and investors will end up going through Paypal without realizing that the benefits offered by cryptocurrency are being undermined by these fiat-focused institutions, as many other financial institutions are bound to follow in Paypal’s footsteps. 

In fact, some are already on this path, as you will find the same problems on WealthSimple here in Canada for stock trading. Should you decide to invest in cryptocurrency on Wealthsimple, you cannot withdraw or spend it similarly to Paypal. 

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Clearly here WealthSimple is saying the exact same thing as Paypal. You can only hold cryptocurrency on WealthSimple and speculate, but you do not actually own the cryptocurrency because you cannot withdraw it.

You’ll find the same issue on Robinhood in the United States, and I would guess many other fiat services, payment processors, and stock exchanges who offer crypto trading will have the same restrictions. 

You may be thinking, well I technically have to “get permission” from my bank to access my funds, so how is this any different? First off, that’s one of the main reasons cryptocurrency exists, so that you can truly own your funds and have complete autonomy over your finances.


If we use bitcoin as an example, if your bitcoin was lost, it cannot just be reissued. They can be insured, and they can pay you back in fiat money, but they cannot print more bitcoin and give it to you. Banks will never have this issue because they can get newly printed money to give to you. While they could buy more bitcoin, given it is scarce and there will only ever be 21 million, this is not sustainable, reliable, or feasible. WealthSimple is insured up to 200 million dollars, but if bitcoin went to $100,000, then that means only 2000 bitcoins are insured.

There is a reason Bitcoin was designed to be decentralized. Paypal, fiat payment processors, and stock exchanges used to be very against cryptocurrency, but have since found a way to centralize it so that they are the ones in control. Consequently, they are now rolling out all their cryptocurrency trading platforms as what they would want you to believe to be a favour. Instead, they will be giving new adopters a very bad and false first impression of what cryptocurrency was meant to be

Scott Cunningham

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