PayPal is Preparing to Buy Crypto-asset Custodian BitGo

PayPal revealed it would accept cryptocurrency payments in 2021. Shortly after, rumours circulated claiming that the payment giant is looking to buy a custodian of digital assets.

Global payments company PayPal is looking to buy a firm crypto assets custody, according to a report by Bloomberg on October 23. The media company stated that Paypal is currently in talks with BitGo Inc.

Anonymous sources in the report claimed that the two companies could reach an agreement in a matter of weeks. BitGo is a California based company, leader in institutional digital asset custody, trading, and finance. BitGo formed in 2013. In 2018, it raised 15 million dollars in a round led by Goldman Sachs and Galaxy Digital.

Still, the deal is far from becoming concrete, and the report notes that the talks could still fall apart. PayPal could choose to buy other targets.

The rumours come after PayPal announced this week that it would launch crypto-asset payment services starting next year. It was the catalyst for a rapid double-digit percentage boost for the price of Bitcoin.

Not everyone is happy with the possible PayPal acquisition. The official Thorchain (RUNE) account raised concerns about the decentralization of Wrapped Bitcoin (WBTC), given that the majority of Bitcoin (BTC) locked in the protocol are in the custody of BitGo.

Yesterday, Meltem Demirors, the CSO of crypto-asset manager CoinShares, predicted that PayPal would seek to launch a stablecoin after the payments company left the government partnership for Facebook’s Libra project.

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PayPal’s recent news left some in the crypto industry concerned

Bitcoin’s surge past $13,200 caused joy for many in the industry. Which occurred following an announcement that Paypal intends to integrate crypto in its network. However, some fail to see any benefits beyond the immediate price movement.

According to a blog post from Satoshi Labs, PayPal’s push to start selling Bitcoin is probably not because they want to spur healthy adoption. 

In fact, their arguments are similar to ones made by many crypto holders against storing digital assets on exchanges.

Suppose millions of newcomers jump into Bitcoin through PayPal. In that case, there could be a very serious information gap that jeopardizes their experience. Moreover, it undermines the fundamental principles of cryptocurrency, Satoshi Labs stated. No one should consider the money held entirely by a third party as owned by them. Time after time, exchanges have lost user funds, often leaving them with no recourse.