PayPal, one of the world’s largest financial technology (fintech) companies, has disclosed its cryptocurrency holdings in a recent quarterly report filed with the United States Securities and Exchange Commission (SEC). Based on the filing, the total PayPal crypto holdings amounts to $943 million.
Crunching Down the Numbers
According to the report, PayPal’s cryptocurrency holdings as of March 31, 2023, summed up to $943 million. The latest figures translate to a 56% increase from the previous quarter’s holdings of $604 million.
Meanwhile, the company reported total financial liabilities of $1.2 billion for the same period, wherein crypto assets constituted 77.9% of the liabilities. The payment portal stated that it considers its crypto assets as a “safeguarding liability” owing to the exceptional risks inherent in cryptocurrencies.
PayPal Crypto Holdings
PayPal customers in certain markets can buy, hold, sell, receive, and send certain cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. Its platform allows customers to use the proceeds from sales of cryptocurrencies to pay for purchases at checkout.
The company noted that it currently limits the custody of assets it manages for customers to third-party holding firms. So, in the event that these third parties are unable to execute transactions, it could present a liability for the customers. However, according to the filing, there have been no instances of such failure so far.
PayPal’s cryptocurrency asset breakdown for Q1 2023 includes $499 million in Bitcoin, $362 million in Ether, and $82 million in Bitcoin Cash and Litecoin. So far, Bitcoin constitutes the largest proportion of the digital wallet’s cryptocurrency holdings, followed by Ether, Bitcoin Cash, and Litecoin.
The increase in the payment platform’s cryptocurrency holdings is indicative of a broader trend of mainstream adoption of cryptocurrencies by financial institutions. As more companies integrate cryptocurrency into their business models, the asset class is becoming increasingly legitimized and mainstream.
PayPal’s Continued Success
The payment portal’s financial success continued to climb in the first quarter of 2023. Based on generally accepted accounting principles (GAAP), the company reported earnings per share of $0.70, which is an improvement from the $0.43 reported in the first quarter of 2022. On the other hand, its earnings per share on a non-GAAP basis showed growth, with a reported increase to $1.17 from $0.88 in the previous year’s corresponding quarter.
The disclosure of PayPal’s crypto holdings is significant in light of the company’s influence in the fintech industry. As one of the largest digital payment platforms in the world, PayPal’s embrace of cryptocurrency may pave the way for other financial institutions to emulate this strategy.
The recent PayPal crypto holdings disclosure is important for customers who can now see the company’s commitment to these digital assets. The fact that the company holds these, despite the risks involved, shows that it believes in the long-term value of cryptocurrencies. Customers can now be confident that their investment in cryptos is backed by one of the biggest names in the financial industry.
Furthermore, the increase in the platform’s crypto holdings is an indication that cryptocurrencies are becoming more widely accepted by mainstream financial institutions. As more companies follow their lead, the asset class will continue to be legitimized, which is good news for investors and the broader crypto community.
Overall, PayPal’s disclosure of its crypto holdings is a positive development for the industry. As the company continues to enjoy financial success and increase its holdings, it’s likely that more financial institutions will take notice and follow suit. With the growing mainstream adoption of cryptocurrencies, it’s clear that the future of finance is changing, and PayPal is at the forefront of this transformation.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.