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- PayPal lets US users buy, sell, or hold Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
- You’ll need $1 to get started, and transaction fees and exchange rates (including spread fees) will apply.
- PayPal’s newly launched “Checkout with Crypto” feature allows investors to use crypto as payment.
- Click here to get started with PayPal’s cryptocurrency services.
PayPal Holdings, Inc. is an electronic money transfer platform offering financial services to consumers and merchants in more than 200 markets around the globe.
Its cryptocurrency services have been available since 2020, but in March, PayPal expanded those offerings with its launch of the “Checkout with Crypto” service.
As long as you’re a PayPal user with crypto assets in the US, you can buy, sell, hold, and/or checkout with cryptocurrencies such as Bitcoin and Ethereum.
How to invest with PayPal
In order to purchase cryptocurrencies, you’ll have to complete a one-time Crypto registration process.
To invest in crypto using the PayPal app:
- Click on “crypto” from your PayPal dashboard
- Hit the “buy” button (PayPal will ask you to verify your identity)
- If you’re still uncertain about crypto and PayPal’s offerings, you can review its educational articles to learn more.
Another thing to note is that you can only hold cryptocurrencies you’ve purchased through PayPal. You can’t currently transfer cryptocurrencies in and out of your account.
PayPal also has maximum dollar limits for crypto transactions. There’s a $20,000 maximum dollar limit for weekly crypto purchases and a $50,000 limit for purchases over a 12-month period, according to PayPal.
PayPal: Account custody considerations
Though PayPal says that you own each cryptocurrency you buy on the platform, it doesn’t offer private keys for those assets. In the world of cryptography and crypto wallets, private keys function as heavily encrypted access codes that give you protected access to all of your crypto products.
Crypto services Electrum and Coinbase both offer private keys, which are one of two keys that popular cryptocurrencies like Bitcoin rely on when it comes to transactions. The other is a public key. As the name implies, public keys are publicly known and typically used for identification purposes.
Part of the allure of private keys in cryptocurrency investing is that — like a personal bank account number — they protect your assets from being compromised. A public key doesn’t mean the public get access to your assets; it just allows PayPal to access your cryptocurrency holdings in order to execute trades and purchases. However, this means that should PayPal’s security be compromised, so could any cryptocurrency assets it has permission to access.
Though PayPal offers buyer protection on cryptocurrency transactions, its no-private-key rule could be a downside for those who want complete custody over the crypto assets they buy, sell, or hold through PayPal.
PayPal cryptocurrency investing features
Cryptocurrencies are virtual assets that utilize a highly encrypted blockchain technology. These assets are also commonly used as forms of payment for goods or services, but they’re heavily volatile since their prices rapidly fluctuate. PayPal currently offers four types: Bitcoin (including Bitcoin Cash), Ethereum, and Litecoin.
While you won’t have to pay fees for simply holding crypto in your account, you’ll need at least $1 to get started. PayPal also charges the following transaction fees (these vary based on purchase amount):
- $1-$24.99 purchase amount: $0.50 USD
- $25-$100 purchase amount: 2.30%
- $100.01-$200 purchase amount: 2.00%
- $200.01-$1000.01 purchase amount: 1.80%
- $1000.01+ purchase amount: 1.50%
For instance, if you bought $75 worth of Bitcoin, you’d have to pay a 2.30% asset-based transaction fee. However, there are also other fees involved.
PayPal charges a spread, or margin, between the market price it earns from its trading service provider and the exchange rate between USD and crypto assets shown to each customer. The company says this “spread” fee applies to all crypto transactions, including its new Checkout with Crypto service.
PayPal will disclose both the applicable exchange rate and the spread (typically 0.50%) for each transaction, according to its website.
Fees also apply for personal transactions or transfers where currency conversions are involved. Right now, only customers in the US and US territories (excluding Hawaii) can buy, sell, or hold cryptocurrencies on PayPal.
Is PayPal the right crypto platform for you?
This depends on your preferences. PayPal could be a good option for existing customers who regularly use the platform for money transfers and other services. Whether you’re using cash or crypto, you can hold either in your account without any additional charges.
But note that PayPal’s new checkout feature doesn’t actually let you pay with cryptocurrencies. The new service converts your existing crypto assets into US dollars to complete any purchases.
Another thing to keep in mind is that PayPal charges small transaction fees (you can think of them as mini commissions) and exchange rates (including spread fees) when you buy or sell cryptocurrencies.
Additional considerations: PayPal’s selection of cryptocurrencies — Bitcoin (including Bitcoin Cash), Ethereum, and Litecoin — might be limited for investors looking for a wider range of cryptocurrencies or other securities like stocks or ETFs. If you meet this description, consider our list of the best online brokerages for every type of investor.
Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products.