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This should be interesting. I'll be particularly interested in seeing how Paypal handles KYC for the cryptocurrencies it buys and how it manages pricing variati

This should be interesting. I'll be particularly interested in seeing how Paypal handles KYC for the cryptocurrencies it buys and how it manages pricing variations, where they're paying merchants in Fiat. Also all the people at Tether can plan to print themselves some new coins --> BTC and then go on a shopping spree :P (for the humour impaired, this bit is a joke)

xorcist 6y ago
It is not certain they will do anything that makes price variations a concern. Now they'll simply allow their customers to buy and sell. On the KYC front, actors like Paypal (and Square, Braintree and so on) are in a very good position, as they are already payment processors and fully compliant with those regulations. That is something smaller upstarts struggle with, not the established ones. It can even benefit them as a moat.
- raesene9 6y ago
  If I read the article correctly it said that Paypal would take payement in cryptocurrencies and then pay the merchants with fiat. That means they will need to hedge the risk of a change in exchange rate between buying and settlement (for example paypal offers to settle payment 14 days after payment as a service). Now they can do that, but it'll take some effort. On KYC I'd agree they're in a better position, but it seems like they'll still need to beef up their processes, as regulators are quite interested in proving where cryptocurrencies came from. They'll not want to be caught with a load of coins that came from the latest ransomware incident.
  - fauigerzigerk 6y ago
    >but it seems like they'll still need to beef up their processes, as regulators are quite interested in proving where cryptocurrencies came from. Perhaps PayPal will only allow people to pay with cryptocurrency they have bought from PayPal in the first instance. So there wouldn't be any incoming our outgoing movements of cryptocurrency at all.
dasudasu 6y ago
The tether thing is less of a joke than you think. There is nothing preventing them to do exactly that. If you corner a BTC fanatic, they will often admit so themselves, but will claim it is no different than a central bank printing money or a regular bank doing fractional reserve banking. There is plenty of circumstantial evidence that the tether supply is strongly correlated to BTC (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066), and at this point you have to take it as a point of faith that all the tether in circulation truly comes from fiat deposits. On the regulatory side, crypto currencies are very much like going back to the days of Wild West finance, random hold-ups included.
- javert 6y ago
  Ironically, bitcoin itself is the solution for the "Wild West" problem of a company like Tether just printing money. By the way, Tether supply should be correlated to BTC, whether or not they are doing a fractional reserve.
  - dasudasu 6y ago
    Many people into Bitcoin seems to be only concerned about the USD exchange rate. Even if people agrees that manipulation takes place, when it comes to Tether printing, it ends up inflating BTC, so clearly in their interest to go along. The speculative aspect becomes all-encompassing.
    - javert 6y ago
      A lot of bitcoiners are long-term holders who either don't care what happens with Tether, or want the price to crash so they can load up on more bitcoin.
- howlgarnish 6y ago
  I haven't been following the Tether saga lately: is there any actual evidence that Tether is backed up with fiat?
asah 6y ago
Specifically, inbound/outbound crypto transfers. I can imagine copying Robinhood, where you can buy/sell crypto but can't transfer in native form - you have to convert to USD and then transfer.

xorcist 6y ago

It is not certain they will do anything that makes price variations a concern. Now they'll simply allow their customers to buy and sell. On the KYC front, actors like Paypal (and Square, Braintree and so on) are in a very good position, as they are already payment processors and fully compliant with those regulations. That is something smaller upstarts struggle with, not the established ones. It can even benefit them as a moat.

raesene9 6y ago
If I read the article correctly it said that Paypal would take payement in cryptocurrencies and then pay the merchants with fiat. That means they will need to hedge the risk of a change in exchange rate between buying and settlement (for example paypal offers to settle payment 14 days after payment as a service). Now they can do that, but it'll take some effort. On KYC I'd agree they're in a better position, but it seems like they'll still need to beef up their processes, as regulators are quite interested in proving where cryptocurrencies came from. They'll not want to be caught with a load of coins that came from the latest ransomware incident.
- fauigerzigerk 6y ago
  >but it seems like they'll still need to beef up their processes, as regulators are quite interested in proving where cryptocurrencies came from. Perhaps PayPal will only allow people to pay with cryptocurrency they have bought from PayPal in the first instance. So there wouldn't be any incoming our outgoing movements of cryptocurrency at all.

dasudasu 6y ago

The tether thing is less of a joke than you think. There is nothing preventing them to do exactly that. If you corner a BTC fanatic, they will often admit so themselves, but will claim it is no different than a central bank printing money or a regular bank doing fractional reserve banking. There is plenty of circumstantial evidence that the tether supply is strongly correlated to BTC (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066), and at this point you have to take it as a point of faith that all the tether in circulation truly comes from fiat deposits. On the regulatory side, crypto currencies are very much like going back to the days of Wild West finance, random hold-ups included.

javert 6y ago
Ironically, bitcoin itself is the solution for the "Wild West" problem of a company like Tether just printing money. By the way, Tether supply should be correlated to BTC, whether or not they are doing a fractional reserve.
- dasudasu 6y ago
  Many people into Bitcoin seems to be only concerned about the USD exchange rate. Even if people agrees that manipulation takes place, when it comes to Tether printing, it ends up inflating BTC, so clearly in their interest to go along. The speculative aspect becomes all-encompassing.
  - javert 6y ago
    A lot of bitcoiners are long-term holders who either don't care what happens with Tether, or want the price to crash so they can load up on more bitcoin.
howlgarnish 6y ago
I haven't been following the Tether saga lately: is there any actual evidence that Tether is backed up with fiat?

asah 6y ago

Specifically, inbound/outbound crypto transfers. I can imagine copying Robinhood, where you can buy/sell crypto but can't transfer in native form - you have to convert to USD and then transfer.