After announcing in August that it was temporarily pausing its cryptocurrency activities for UK clients, PayPal revealed this week that it had received approval to get back into that business. The payments giant said that Britain’s Financial Conduct Authority (FCA) has approved its registration as a cryptoasset operation, and the company expects it will return to crypto services sometime in early 2024.
“The UK has been a part of PayPal’s larger strategy to expand its crypto services into other markets since they first launched there in 2021,” said James Wester, Director of Digital Assets and Crypto at Javelin Strategy and Research. “Today’s announcement just demonstrates the challenges faced by companies as they look to other markets.”
When PayPal re-enters the UK market, there will be significant limitations on what it’s able to do in crypto. While the FCA has granted PayPal the ability to offer cryptocurrency services, certain requirements and restrictions have been placed on its financial activities. PayPal’s crypto services will be restricted to existing customers, who will only be able to hold and sell crypto assets, but not purchase them.
That’s very different from the case in the U.S., where PayPal already offers extensive crypto services. With PayPal, you can send and receive crypto to and from eligible confirmed personal PayPal accounts in the U.S. and U.S. territories (excepting Hawaii), or buy, hold, and sell crypto. It can handle Bitcoin, Ethereum, Litecoin, and Bitcoin Cash—and the company has even launched its own stablecoin, although that has recently come under regulatory scrutiny from the SEC.
A Landscape for the Major Players
PayPal’s reemergence in the UK crypto market points up that the current landscape is most favorable for the larger, more experienced players in this space. Even those players have had challenges in dealing with regulatory hurdles, such as PayPal’s subpoena from the SEC over its stablecoin, but they tend to be better equipped to get past them.
“Crypto regulations vary from market to market, and they are still evolving, so companies have new regulations and requirements they have to meet,” Wester said. “Given the immaturity of the space, that will be a challenge faced by companies like PayPal for the foreseeable future. For PayPal and other traditional financial services providers, they have the resources and expertise to deal with compliance challenges in these markets. Newer entrants may find these challenges more difficult to overcome.”