While PayPal’s pivot to Bitcoin has sparked a bout of euphoria within the cryptocurrency community, there are those who took a sober look at the upcoming cryptocurrency-related services of the payments behemoth.
Ripple CEO Brad Garlinghouse has also joined the list of PayPal critics. In an Oct. 21 tweet, Garlinghouse calls its move into crypto “disappointing” because he believes that it spurs the key benefits of crypto as an asset class:
“2 steps forward, 1 step back…Great to see a payment pioneer leaning in, BUT disappointing some fundamental tenets / benefits of crypto are spurned.”
No keys and no withdrawals
As reported by U.Today, the $250 bln company announced that it would soon allow cryptocurrency spending, following in the footsteps of Jack Dorsey’s Square.
The list of supported digital assets includes Bitcoin, Ether, Bitcoin Cash, and Litecoin, XRP, the fourth largest cryptocurrency whose supply is largely controlled by Ripple, is notably absent on the list.
However, most of those who were busy celebrating the new adoption milestone and watching Bitcoin pump to a new yearly high missed some intricate details in the cryptocurrency offering.
It turns out that PayPal users will not be provided with a private key to their cryptocurrency holdings. Moreover, it will be impossible to send crypto to other accounts “on or off PayPal”:
“You can only hold the Cryptocurrency that you buy on PayPal in your account. Additionally, the Cryptocurrency in your account cannot be transferred to other accounts on or off PayPal.”
Blame regulatory uncertainty
Garlinghouse suspects that these limitations are likely related to regulatory uncertainty in the U.S:
“I suspect PayPal is concerned about the (wait for it…) regulatory uncertainty, impacting its roll-out on a number of levels.”
Ripple is currently mulling over moving its headquarters to a more crypto-friendly country.