PayPal has jumped into the cryptocurrency space by launching its new crypto wallet.
The new service allows customers to buy, sell and hold cryptocurrency including Bitcoin, Ethereum, Litecoin and Bitcoin Cash. The service specifically doesn’t allow customers to buy goods using cryptocurrency, so its simply a trading platform.
PayPal has contacted all of its millions of users to advertise the new product with information including videos about cryptocurrency.
They include information warnings about the volatility of the offer including the following disclosure:
“Buying and selling cryptocurrency is subject to a number of risks and may result in significant losses and the loss of all the money you have paid for it. Please see our disclosure for further information.”
They have a range of charges depending on the value of the purchase or sale. In the UK the advertised charges are as follows:
Up to £25 – £0.50
£25 to £100 – 2.3%
£100 – £200 – 2.0%
£200 – £1000 – 1.8%
£1000 + – 1.5%
The only reason PayPal are able to make this offer is because cryptocurrency dealing remains unregulated and outside the scope of the FCA. That also means that it is outside the scope of the regulator’s compensation schemes as well. You don’t need to be a Money Advisor to offer the service.
Its no real surprise that PayPal has decided to enter the growing cryptocurrency market. What is surprising is that the market is being allowed to trade without regulation when the levels of volatility are as high as any other form of speculative investment we can think of. The FCA’s warnings advise customers to expect to lose all their money, but how many actually think that it carries that level of risk?