- PayPal would consider acquiring crypto companies, including the BitGo crypto custodian.
- PayPal has recently added support for cryptography, causing the price of Bitcoin to soar.
- The integration of BitGo has the potential to satisfy critics.
After its initial purchases of cryptography, PayPal would consider acquiring crypto companies. A possible acquisition could be the BitGo depository, a major player in the digital currency space.
According to Bloomberg, PayPal Holdings is in discussions to acquire BitGo, a digital currency „depositary“ company. BitGo helps customers securely store large amounts of cryptography. BitGo also provides up to $100 million in insurance to customers, backed by the major insurer Lloyds of London.
The acquisition would be a significant expansion of PayPal’s foray into crypto bull, especially after the green light for crypto purchases on 21 October. According to Bloomberg, other companies could also be in the mix. PayPal is also considering partnering with the Paxos Trust Company, a regulated crypto provider.
According to sources who wished to remain anonymous and quoted by Bloomberg, PayPal and BitGo could reach an agreement within a few weeks. One source noted that this was not a sure thing, and PayPal could go and explore other acquisitions.
A major player in the firing line
BitGo is a successful company in the field of crypto. In 2018, the custodian has raised approximately $58 million and currently serves customers such as the central funding company Nexo. The company has positioned itself as a security solution for institutional investors, making it an attractive choice for large regulated companies such as PayPal.
No less attractive is the fact that the company’s security is based on „cold storage“ portfolios, meaning that account keys only exist offline. They also use several offline signature portfolios that are more difficult to hack into.
A big gamble for Paypal
After the announcement that customers can buy, sell and hold digital currencies, Paypal’s share price reached unprecedented highs (and then returned the next day).
PayPal shares rose and recovered after the announcement of digital currency support: TradingView
PayPal now authorises services for several cryptosystems, including Bitcoin, Ether, Bitcoin Cash and Litecoin. Users can use their virtual currencies to make purchases from 26 million suppliers. In recent years, the lack of convenience to pay with encrypted currencies seemed to be a major obstacle to widespread adoption. In the wake of the news, Bitcoin surpassed $13,000 for the first time in over a year.
However, not everyone was pleased with the positive news from PayPal. Some saw it as another intermediary between users and their crypto. Others pointed out that PayPal does not currently allow crypto to be transferred off the PayPal site to private wallets and does not give private keys to users. The old adage, „not your keys, not your crypto“, warns of the danger of this configuration.
Fortunately, the acquisition of BitGo by PayPal, if it materializes, could be very positive news for opponents. BitGo’s guard services could be integrated with PayPal to some extent. This could theoretically ensure crypto on PayPal and make the payment company feel secure enough to allow transfers and delivery of private keys.
Meanwhile, news of large companies diving into the crypto space, such as those buying bitcoins, continues to rise.