Skeptics abound when it comes to digital currencies, but PayPal Holdings Inc. is out to prove them wrong. Chief executive Dan Schulman, an early enthusiast, made it plain Wednesday he sees the crypto trend not only as the company’s big opportunity, but also as a potential liability if PayPal fumbles the ball.
“This whole idea of establishing a cryptocurrency and blockchain unit within PayPal is how we can be a shaper of that [trend], a leader of that, and not a reactor,” he told equity analysts tuned in to hear the San Jose, Calif.-based payment company’s first-quarter results.
While PayPal did not release numbers regarding its nascent cryptocurrency business, it has in recent months made headlines with its effort to allow users to spend Bitcoin and other crypto with PayPal-accepting merchants. The digital currencies are converted to local fiat money for merchant acceptance. Now, Schulman says, the next big opportunity could lie in central bank digital currencies, which track local fiat money and are expected to avoid the turbulent swings in value that plague Bitcoin and other digital assets.
“We have had quite a number of conversations in the United States and across the world with regulatory bodies and in government,” Schulman said. “We’re understanding the concerns they may have, how CBDCs could be issued. Each government is going to go at a different speed, but there isn’t one government that isn’t envisioning a future with digital fiat currency.”
Besides introducing merchant acceptance last year, PayPal has proved willing to invest heavily in building out a cryptocurrency capability, including security assets. Last month, it closed on its acquisition of Curv Inc., a crypto security firm based in Tel Aviv. PayPal has not disclosed a purchase price, but estimates have ranged from under $200 million up to $300 million. “Both crypto and CBDCs could play a critical role [for PayPal],” Schulman said Wednesday.