PayPal And VISA Take the Payments War to the Crypto Arena

It’s a pretty good start this week as last week’s crypto market volatility has been subdued with Bitcoin (BTC) and the overall crypto market getting a clear direction moving north. 

Today, i.e. Tuesday, March 30, the overall cryptocurrency market cap has reached its all-time high of $187 trillion. However, before we take a look at the market movement let’s see some of the most interesting developments in the crypto space. 

Yes, payment giants VISA and PayPal have recently accelerated their developments in terms of offering crypto services to their customers. It looks like traditional market players are looking to grab the pie of the rapidly evolving crypto market by launching their products and services. 

PayPal and VISA Initiate Fresh Developments in The Crypto Space

On Monday, March 29, payment giant VISA announced that it shall be using Circle’s USDC stablecoin to settle transactions on its network. For this, VISA has joined hands with the world’s largest crypto platform to settle all USDC payments over the Ethereum blockchain network. 

Offering support for digital currency settlements on its platform is an important step by VISA in bridging the gap between the crypto and the traditional financial world. Besides, it is also a major milestone in getting crypto use to mainstream finance. 

VISA said that this USDC integration will be very useful for crypto native companies and other business models operating within the FinTech space. 

Jack Forestell, executive vice president and chief product officer, Visa said: “Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors. The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency, and it’s really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.” 

In another major development today, payments giant PayPal announced its crypto checkout services for U.S. customers. Meaning, PayPal’s U.S. customers can now use their crypto holdings to pay at millions of merchants globally. 

This is a major step by PayPal to boost cryptocurrency use in everyday commerce. The company announced that customers who hold BTC, ETH, BCH, and LTC in their Paypal wallets can convert those into fiat at the checkout while making the purchase. 

Speaking to Reuters, PayPal CEO Dan Schulman said: “This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet”. 

PayPal said that it had been working on this service over the past few months. Besides, it also plans to roll-out this service to all of its 29 million merchants in the coming months. While cryptocurrencies are certainly gaining popularity worldwide, the fact remains that it is a highly volatile asset class. PayPal says that by settling transactions in fiat it won’t expose its merchants to the volatility risks. However, this is certainly a major milestone in the financial world. 

“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” Schulman said. 

Cryptocurrency Regulatory and CBDC Developments

Looking at the unfathomable crypto rally and the mainstream acceptance, governments and regulators are working on bringing regulatory clarity to the space. Currently, the crypto world is eyeing some regulatory developments in India as the government is mulling a crypto ban. 

As the Indian government and central bank RBI is working on introducing regulatory clarity, the Ministry of Corporate Affairs has asked local businesses and companies to declare their crypto holdings. This will bring more clarity on the institutional and corporate participation in India’s crypto market. 

On the other hand, the Chinese central bank PBoC has proposedthe Bank of International Settlements (BIS) to introduce common rules for global CBDCs. China has been leading the CBDC developments among the top economies of the world. 

Mu Changchun, the director-general of the PBOC’s digital currency institute said: “Interoperability should be enabled between CBDC (central bank digital currency) systems of different jurisdictions and exchange. Information flow and fund flows should be synchronised so as to facilitate regulators to monitor the transactions for compliance.” 

Interestingly, Mu also confirmed that the Digital Yuan shall co-exist along with WeChat Pay and AliPay. Thus the battle between the two giants – WeChat vs Alipay – has a third player in between. 

Bitcoin & Crypto Developments in the Market

After last week’s volatility, Bitcoin (BTC) is showing a strong move north and is currently trading at $59,000 with a market cap of $1.1 trillion. With this, the total value of Bitcoin in circulation has surged past the world’s fifth-largest currency aka the Australian Dollar (AUD). This is one of the biggest milestones as Bitcoin continues to challenge the likes of fiat currencies. 

Apart from retail and institutional investors, Bitcoin continues to get wider acceptance among retirement funds and pension funds. Last week, New Zealand’s Kiwisaver Pension Fund announced that it’s invested around 5% of its assets under management to a Bitcoin fund. The investment happened during Q4 2020. Below is a look at the chart of how the fund performance shot north after exposure to BTC. 

Pension-fund-Bitcoin-BTC Source:Pension-fund-Bitcoin-BTC (Courtesy:WillyWoo)

In another development, the world’s leading derivatives platform CME announced that it will introduce its new Micro Bitcoin futures contract on May 3, 2021. The CME Micro Bitcoin Futures all be one-tenth the size of Bitcoin. 

“The introduction of Micro Bitcoin futures responds directly to demand for smaller-sized contracts from a broad array of clients and will offer even more choice and precision in how participants can trade regulated Bitcoin futures in a transparent and efficient manner at CME Group,” said Tim McCourt, CME Group Global Head of Equity Index. 

PayPal crypto – 85 KD 

Buy crypto with VISA – 71 KD 

USDC stablecoin – 73.37 

Merchants accepting paypal – 78.51 

Brace Yourselves, Here Come the Bitcoin ETFs