Payments Giant PayPal Holds $1 Billion Worth of Digital Assets On Its Balance Sheet

11. May 2023 Posted by Akolkar B on News

In a 10-Q filing submitted to the US Securities and Exchange Commission (SEC), payments giant PayPal Inc. that it holds nearly $1 billion in digital assets on its balance sheet.

The company said that it holds $943 million worth of customer assets across different digital assets such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH) on its balance sheet. The filing shows that there’s an 56% increase over the company’s previous quarter wherein PayPal disclosed $604 million.

During the last quarter, PayPal reported total financial liabilities of $1.2 billion, with crypto assets alone making 77.9%, a massive surge from the 10% liabilities reported during the fourth quarter of 2022.

In its report, PayPal mentions crypto assets as safeguarding liability due to the “unique risks associated with cryptocurrencies”. Furthermore, the disclosure by the company notes that some specific digital assets held; d by the company have remained unchanged since the last quarter.

PayPal added: “We maintain the internal recordkeeping of our customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers. We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin (collectively, ‘our customers’ crypto assets’).”

Note that the custody of assets which PayPal holds on behalf of its customers remain limited third-party holding companies. PayPal has acknowledged that such a structure presents a liability for customers in case of an event wherein third parties are unable to process transactions. However, PayPal customers haven’t encountered such problem so far.

The filing with the SEC notes: “As of March 31, 2023, the Company has not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value.”

PayPal has been one of the early participant in the crypto economy and started offering Bitcoin trading services back in 2020. The company is cautiously making a push in crypto while taking into consideration the regulatory developments in the space.