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Payments Giant PayPal Invests in New Crypto Wallet Software to Boost Web3 Adoption

Payments giant PayPal is investing millions in Magic, the San Francisco-based crypto wallet company, in its latest venture into the digital asset space.

According to Magic’s press release, the wallet-as-a-service (WaaS) provider has raised $52 million in a strategic funding round led by PayPal Ventures.

According to Alan Du, partner at PayPal Ventures,

“Mass adoption of Web3 is a hot topic, and Magic is facilitating it with a simple and secure solution. discover Web3. We are proud to invest in Magic and are confident that the company will help increase the number of use cases for Web3 among global brands.”

The funding round also included investments from Cherubic, Synchrony, KX, Northzone and Volt Capital, bringing the total amount raised by Magic to $80 million, according to the release.

Magic, a 2018 tech startup, provides a non-custodial crypto wallet infrastructure for companies that want to give their customers a simple and secure Web3 experience.

The company uses a unique Software Development Kit (SDK) which is implemented to allow customers to instantly create wallets using their existing email, social media accounts or SMS. To date, Magic has created more than 20 million unique wallets, according to the release.

Current Magic customers include several branded companies, including Mattel, Macy’s, Xsolla, and Immutable.

Magic co-founder Sean Li said the funding will allow the company to expand its presence in the European Union (EU) and Asia-Pacific (APAC) region.

says Li,

“With this new funding, we are focused on expanding functionality and growing use cases to continue to deliver more value to our customers. We also look forward to achieving deeper integration in the EU and APAC.”

Paypal’s recent filing with the United States Securities and Exchange Commission (SEC) shows that the company held approximately $604 million in digital assets, including $291 million in Bitcoin (BTC) and $250 million in Ethereum (ETH), in the fourth quarter of 2022.

Last December, they also announced a partnership with cryptocurrency firm ConsenSys to integrate PayPal with MetaMask, one of the most popular cryptocurrency wallets in the world.

In April, PayPal-owned Venmo announced plans to allow its more than 70 million users to transfer cryptocurrency to other Venmo users, as well as move digital assets to wallets and external exchanges.

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PayPal allows the transfer of digital currencies to external wallets

The move comes after nearly two years since PayPal allowed users to buy and sell cryptocurrencies on its platform.

After launching the ability to buy and sell cryptocurrencies on its platform in October 2020, PayPal finally allows users to transfer, send and receive digital assets between PayPal and other wallets and exchanges. Starting today, the feature is available to select US users and will be expanded to all eligible US users in the coming weeks. The first batch of supported coins consists of Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

In addition, customers who transfer their cryptocurrencies to PayPal can spend them through Checkout at millions of merchant terminals. The New York Department of Financial Services granted the company a full Bitlicense for the conduct.

Users would simply have to log into their accounts and enter the crypto section of the app to start transferring transfer coins. Users are often required to complete a one-time identity verification before the procedure.

Encryption transfers to recipients outside of PayPal would incur a network fee based on their respective blockchain, but transfers between PayPal users will not incur such fees. To protect users’ privacy, the company generates a new recipient address for each transaction in the PayPal account. PayPal will also not charge fees for incoming transfers,

The company is also working to integrate other forms of cryptocurrency services, such as central bank digital currencies, to increase its digital presence. It is also exploring the possibility of launching its own stable coin, called “PayPal Coin”. The discovery came after a developer found evidence of a stablecoin in the source code of the company’s iPhone app.

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PayPal CEO Predicts Cryptocurrencies Will Revolutionize Global Financial System

The CEO of one of the world’s largest payment providers predicts that cryptocurrency technology will revolutionize financial systems globally.

Ahead of Axis Tel Aviv’s international investment conference, PayPal CEO Dan Schulman told interviewers that he has high hopes for cryptocurrencies in the future.

“I am very excited about what cryptography and digital accounting technology can do for the financial system in the future…”

Schulman’s high hopes for crypto go far beyond Bitcoin (BTC) trading and into the realm of real-world use cases such as crypto as payment options.

“I think the initial things that everyone thinks about cryptocurrencies, buying and selling, and what is the price of Bitcoin tomorrow, that’s the least interesting part of digital currencies for me. This is thinking of digital currencies as an asset class. To me, the really exciting thing about digital currencies is the kind of utility they can provide in payments.”

Specifically, the payments giant’s CEO believes that central bank digital currencies (CBDCs) and digital wallets have the power to redefine everyday financial interactions.

“Clearly, around the world, central banks are considering issuing digital currencies. The intersection of CBDC, stablecoins, digital wallets and the enhanced utility of cryptocurrency payments is not only fascinating, but I think it will redefine much of the financial world going forward.”

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PayPal joins other payment and remittance providers in suspending services in Russia

Several payment and remittance platforms, now including PayPal, have restricted access to their services in Russia as Western sanctions over Moscow’s invasion of Ukraine continue to expand. Fintechs have been limiting operations in the Russian Federation as well in response to Kiev’s call for help.

Payments giant Paypal stops services in Russia and keeps withdrawals for now

Paypal, the global online payments provider, has joined a growing list of fintechs backing Western sanctions against Russia for its decision to invade neighboring Ukraine. The company, which offered Russians only international transactions, canceled its services in the Russian Federation on Saturday.

Cited by Reuters, President and CEO Dan Schulman explained the measure in “current circumstances”, noting that Paypal supports the international community and condemns Russia’s military aggression against Ukraine. The platform stopped accepting new users based in Russia earlier this week.

Through a spokesperson, Paypal added, however, that withdrawals will be supported for an unspecified period of time. The payments giant aims to “ensure that account balances are dispersed in accordance with applicable laws and regulations.”

The announcement follows calls from Kiev authorities to suspend services in Russia and support Ukraine’s fundraising efforts. The US-based California-based company revealed ahead of the weekend that it “has helped raise more than $150 million for charities supporting response efforts.” The Ukrainian government and local NGOs have also received millions in cryptocurrency donations.

Paypal’s move comes after other payment and remittance platforms already suspended certain services in Russia in late February. This includes Wise, which processed international payments for Russian users, and Remitly, which made it easy to send funds.

UK-based fintech Wise initially imposed a daily cap of £200 ($265) on transfers to the Russian Federation, but later suspended all money transfers as the US and its European allies imposed further restrictions on the system. financial situation, including the expulsion of some Russian banks. of the SWIFT interbank payment system.

As a result of the tougher sanctions, Remitly has also suspended support for money transfers to Russian recipients. Other remittance service providers have also introduced similar measures, including Transfergo and Zepz.

According to crypto media reports, UK-based Revolut has suspended payments to Russia and its ally Belarus, while an advertisement on its websites indicates the fintech is doing everything it can to ensure its users can send money to Ukraine. In a blog post, the company’s CEO, Nik Storonsky, highlighted its Russian and Ukrainian roots and expressed its opposition to the war.

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PayPal Establishes Cryptocurrency and Blockchain Advisory Board

“We believe it is crucial to engage with the world’s best leaders to better understand the industry’s most compelling opportunities and complex challenges,” said José Fernández da Ponte.

Leading US payment processor PayPal has assembled a team of industry experts to act as advisors on crypto, blockchain, and digital currencies.

In an announcement Tuesday, PayPal said that adding six members to its Blockchain, Cryptocurrency and Digital Currency advisory board would help support its current and future products, as well as its goal of creating a more inclusive digital financial ecosystem. Fortress Investment Group Co-CEO Peter Briger, Georgetown University Law Center Professor Chris Brummer, Weizmann Institute of Science Professor Shafi Goldwasser, Former Commodity Futures Trading Commission Chairman, Timothy Massad, MIT Sloan School of Management Professor of Finance Antoinette Schoar, and the director of the MIT Digital Currency Initiative. Neha Narula will join the PayPal initiative.

“We believe it is crucial to engage with the world’s best leaders to better understand the most compelling opportunities and complex challenges in the industry,” said José Fernández da Ponte, senior vice president and general manager of blockchain, cryptocurrency and digital currencies at PayPal.

All six advisors have years of experience in the cryptocurrency and blockchain space from a business or regulatory perspective. Briger would have been responsible for advising Softbank Group founder Masayoshi Son to invest millions in Bitcoin (BTC) before the 2017 bull run. Goldwasser was part of a group of MIT researchers who proposed the zero-knowledge proof as an encryption scheme long before the advent. of cryptography.

During her time with the MIT Digital Currency Initiative, Narula was responsible for an initiative to help the Federal Reserve Bank of Boston build a digital currency intended to scale for consumer use. Brummer would have been a CFTC presidential candidate before President Joe Biden officially nominated Rostin Behnam. Massad, who served as CFTC chairman from 2014 to 2017, argued after leaving his post that regulators should approve an exchange-traded fund offering exposure to BTC.

It is unclear whether the advisory group is aiming to expand PayPal’s foray into cryptocurrencies and the blockchain. The payments app announced in October 2020 that it would allow US-based customers to purchase crypto through the platform, later expanding that offering to include crypto payments at millions of its global merchants. The company plans to launch its own stablecoin called PayPal Coin.