PayPal allows bitcoin transfers to third party crypto wallets

Online payment giant already allows its 350 million customers to buy, sell and hold cryptocurrencies

PayPal first announced support for bitcoin and other crypto in 2020 (Getty Images)

PayPal has announced that it will add support for external crypto wallets, allowing users to make bitcoin transfers off the platform for the first time.

The move follows comments from PayPal CEO Dan Schulman that it has seen huge demand from its users for cryptocurrencies since introducing the ability to buy, sell and hold bitcoin, ethereum and other cryptocurrencies.

The California-based company has roughly 350 million customers worldwide, and its recent foray into the crypto space has been seen as one of the key factors behind the market’s resurgence.

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When PayPal first announced that it would be opening up its platform to cryptocurrencies in October, the price of bitcoin to immediately surge.

At the time, bitcoin was trading at around $13,000 (£10,000), with the positive news pre-empting a market rally that continued until April this year when it peaked above $64,000.

Despite a subsequent price crash, bitcoin continues to trade close to $40,000.

The latest news has not had the same immediate impact on the price of bitcoin, though it has come at a time that the market is cooling off rather than warming up.

Crypto analysts appear divided over whether the price crash in May is the start of a prolonged bear market, similar to the one seen in 2018, or if it is just a dip on the way to new all-time highs.

Many seem convinced that crypto has the potential to radically transform the current financial system - a view apparently shared by the PayPal boss.

Mr Schulman recently said that current payment infrastructures were “inefficient” and needed modernisation in order to overcome slow and expensive transactions in an increasingly globalised world.

“Ten years from now, you will see a tremendous decline in the use of cash,” he said last month.

“All form factors of payment will collapse into the mobile phone. Credit cards as a form factor will go away, and you will use your phone because a phone can add much more value than just tapping your credit card.”

Speaking at CoinDesk’s Consensus 2021 conference on Wednesday, the firm’s head of cryptocurrency said: “We want to make it as open as possible, and we want to give choice to our consumers, something that will let them pay in any way they want to pay.”