Platform Review:

PayPal Crypto


PayPal announced its entrance into the crypto industry in November of 2020. Their program of buying, selling and holding crypto is available now for US users only (except Hawaii) on the PayPal app, with plans to extend crypto services to select international regions and has recently announced use to Venmo users. The crypto program will also allow PayPal users to pay in crypto at 26 million PayPal-enabled merchants across the globe. 

American users can buy or sell four digital currencies, Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). But they are not able to transfer digital assets out to external wallets. Cryptocurrency “sells” require a user to cash in their crypto through PayPal’s custody service, which then deposits the proceeds in USD into the user’s account. There are no peer-to-peer transactions available for crypto as you find on American crypto exchanges like Kraken or Gemini.

The initial interface for PayPal’s crypto services is extremely simplified, geared toward the average PayPal user, and continually explains the risks in basic terminology. PayPal enabled zero transaction fees through 2020, helping to ease in new users for this product offering. Users must have a PayPal Cash or Cash Plus Account to utilize the crypto buy and sell features.

Licensed in New York, PayPal Crypto partners with Paxos Trust Company as their cryptocurrency custodian. Paxos has applied for a federal banking charter with the OCC. They currently provide custody service for digital assets as well as offering cash and gold custody, securities clearing, and commodities trading.

Soon after the PayPal Crypto announcement, one user reported their experience of making more than 10 crypto buys or sells in a week using PayPal’s new service. It was during a heavy time of trading due to Bitcoin’s sharp movements and amidst a high level of FOMO. The user in question was using the buy/sell feature as a trading tool, to buy at one time and sell later to reap the profits from the price movements. Their account was flagged, put on hold for 180 days, and permanently limited. What was most striking was the user’s description of the support he received from PayPal, during which he learned that some PayPal employees did not know that crypto buys and sells were available. But it became clear that users attempting to perform crypto trading at PayPal would be flagged and reigned in.

The move by PayPal to include crypto services is generally seen as a positive step towards mainstream adoption of digital assets. Crypto enthusiasts and experts, however, point to the “not your keys, not your coin” dilemma. 

PayPal has a long history or reported personal account hacks, which may or not be associated with insufficient password management or safe computing habits. One of our researchers had their PayPal account drained of funds in 2018 and quickly discovered that scammers had added 4 bogus credit cards to their account. When they called PayPal to report the hack they were relieved, yet somewhat disconcerted, that PayPal barely questioned the hack and immediately refunded the stolen funds, suggesting that this may be a common occurrence. According to Ahrefs SEO tools platform, there are currently 3700 monthly searches for the phrase, “paypal hacks.”

The lack of peer-to-peer interactions along with the fact that PayPal cash services are not available in all countries goes against the ethos of digital assets, which are built on open source, decentralized blockchains.

Since the initial announcement, PayPal stock jumped 17%. Due to high demand, they have already increased weekly buy limits twice, with the current limit now at $20,000 per week (from $10,000 at the start).

  • Available to: US citizens (except Hawaii) (see additional disclosures for residents of New York, Rhode Island, California and Washington). In the first half of 2021, crypto services will roll out to select international markets.
  • Suitable for: Beginners, mainstream PayPal users, non-traders
  • Digital assets available: Buy/sell/hold BTC, ETH, LTC, and BCH
  • Fiat accepted: USD only; expected to open to other regional fiat 2021
Core Features

Features are minimal as PayPal has just recently introduced this service. But the basics are below and the plan is to expand on them in various ways during 2021. 

  • Mobile app only – Crypto services have not rolled out to all web users quite yet but are available now to US residents on the mobile PayPal app. There is a crypto faq on the web version but it leads to a broken page if that user’s account has not yet been activated for crypto features.
  • PayPal users must have a Cash or Cash Plus account in order to buy or sell crypto. 
  • Cash in the PayPal accounts is NOT FDIC insured as it is on Coinbase and Gemini (with some limitations).
  • Users can buy as little as $1 worth of crypto
Four Facets
  • Buy digital assets – Supported cryptocurrencies are Bitcoin (BTC), Ethereum ETH), Litecoin (LTC), and Bitcoin Cash (BCH)
  • Hold digital assets – Crypto can be stored at PayPal but traditional PayPal cash accounts are subject to dormant account fees and it’s uncertain if this will be the case with crypto.
  • Sell digital assets – Transactions are cash settled via Paxos  Trust Company. Before a sell transaction can take place, PayPal first shows the user the amount of cash representing the value of the crypto assets. The price is available for a limited time and if the sale is not initiated within that time frame, the transaction expires and a new one will need to be input to complete a sale, with new pricing information.
  • View charts – Coin performance charts and additional educational resources are available within the app to help bring the mainstream user up to speed with crypto.

Crypto buys and sells are irreversible once they’ve been authorized by the user. Chargebacks will not be allowed for crypto transactions.

  • Thus far, PayPal’s Crypto interfaces are super simple and include easy explanations and guides along the way in appropriate places. 
  • Each time you make a buy, you first get a quick rundown on the crypto asset, which includes a simplified about section and a price performance chart (24h to all time).
  • Information about risks, price volatility, and fluctuation are within the buy/sell interfaces

Transaction fees are based on how much cryptocurrency you buy or sell and the system is geared toward small buys. An exchange rate is also charged for the conversion from crypto to fiat and vice versa, and includes an estimated 0.50% crypto conversion spread. The actual spread may be higher or lower based on market conditions.

  • No fees are charged for crypto holding (but PayPal Cash and Cash Plus accounts do charge dormancy fees if accounts are not active). 
  • Buy and sell transaction fees were waived upon the initial announcement and through 2020.
  • Bank fees (such as overdraft charges) may also be applicable since PayPal’s crypto services are 100% cash settled.
  • Fees for sells and buys are the same.

The lowest fees are on the smallest buys of under $25.00, which is opposite to most crypto fee schedules.

Funding Options
  • Fiat deposits – Users can buy crypto using the funds in their PayPal Cash or Cash Plus account, which connects to your bank.
  • Cryptocurrency deposits – Are not available.
  • Credit & debit cards – Debits cards can also be linked to the PayPal Cash and Cash Plus accounts to fund crypto buys and receive cash proceeds of crypto sales (via Paxos). Credit cards are currently not supported for crypto buys.
Buy and Sell Crypto Limits

Buy and sell limits are extremely low at this time when compared with cryptocurrency exchanges like Kraken, Coinbase, Binance:

  • Weekly buy limit is $20,000
  • Weekly sell limit is $20,000
  • Annual purchase limit (rolling) is $50,000

There is no separate withdraw function for crypto on PayPal. You cannot withdraw crypto assets, you must first sell them to PayPal via their custodian, Paxos. Then you can withdraw the cash. Users must have a PayPal Cash or Cash Plus Account in order to receive the proceeds of the crypto sale.


The following information is required to access PayPal crypto features:

  • Name
  • Physical address
  • Date of birth
  • Taxpayer I.D.
  • They also may require additional information “from time to time” to verify your identity, such as a government-issued I.D. or proof of residence (i.e. utility bill with your name and address showing).
User Experience

The user interface displays very clear, concise language about crypto so that anyone can understand the process and some of the risks of buying crypto.


Navigating the PayPal Crypto pages couldn’t be any easier; it’s far more simplified than even Coinbase.

Customer Support

It’s too early to have enough data about customer support for PayPal’s crypto features. However, PayPal traditionally has gotten slaughtered in reviews. Trust Pilot, for instance, shows an average of 1.2 stars on over 15,000 reviews. That’s 84% negative. Many of the negative reviews mention poor customer support and inactivity charges. There seemed to be less spam reviews than you see with crypto exchanges. It’s hard to imagine how this will go once mainstream users are moving into the comlex world of crypto.

PayPal’s Help Center is well developed and includes helpful guides, answers to common questions, and it curates questions for you based on previous inquiries.

  • PayPal was founded in 1998 and has been a leader in the online payments industry. While there have been many accounts of people having their PayPal accounts hacked, PayPal has over the years improved security protocols and provided information for user as to how to keep their account safe, for example, using a unique password that is changed regularly.
  • One security feature they have implemented is “Key Pinning” mobile devices so that when a connection is established, the key pinning ensures that you are connecting to a true PayPal server and not a scammer posing as PayPal.
  • As far as crypto custody, which is the crux of the entire PayPal crypto initiative, their third party partner Paxos will be tasked with the security of digital assets bought and sold by PayPal users. Paxos is a New York State Trust Company meaning they are subject to regulatory oversight by the New York Department of Financial Services. Crypto assets held by Paxos are backed by mandatory capital reserves.
  • Paxos keeps 100% of custodied digital assets in cold storage, which can be independently monitored on the blockchain.

The status page for PayPal shows very few issues and those that are there appear to be fixed quickly with zero downtime. Standard maintenance is by far the most common status alert.

  • Since buying Bitcoin on PayPal involves giving up access to your private keys, users should know they are also giving up easy access to transaction information that is otherwise available through open public blockchains. Additionally, users may be somewhat in the dark without an order book listing all the recent trades and prices.
  • PayPal does not separately calculate or disclose the spread they earn on each transaction.

Despite the many accounts of people’s personal PayPal accounts getting hacked, the company itself has not been hacked. However, in December 2019, a high security vulnerability that could potentially expose user passwords was discovered. The researcher who reported the bug received a $15,300 bug bounty for disclosing their finding. No breaches were reported in relation to the incident.


PayPal is targeting the mainstream public and will certainly add mainstream attention to crypto markets no matter what. As such, their presentation of crypto services is extremely simplified for easy understanding. Their lowest fees are for the smallest buys, which should help bring aboard many new crypto owners. A high percentage of negative reviews may be foretelling additional customer support issues as newcomers to the space begin to learn about crypto. The partnership with Paxos helps minimize the fact that PayPal accounts get hacked pretty regularly, since Paxos is regulated by New York State, which is famous for having the most stringent crypto regulations.

What PayPal Crypto Doesn't Offer
    • Self custody – All crypto assets are held by PayPal partner, Paxos Trust Company LLC. Users do not hold the seed phrases (aka private keys) to their crypto assets.
    • Trading – PayPal does not offer trading for digital assets.
    • Transfers to external wallets – Not available. To withdraw a crypto asset, it must first be sold by PayPal and deposited into your PayPal Cash or Cash Plus Account.
    • Retail Purchases – PayPal users may not pay for purchases or service using the crypto in their Cash or Cash Plus account.
    • Staking – At this time, there is no staking program at PayPal Crypto.