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Breaking news: US Sanctions Enforcer Blacklists a Crypto Exchange for First Time

PayPal's Move Is Good for Crypto Adoption but Not So Much for Profits: Morgan Stanley

There may be more upside for crypto than for PayPal's earnings, researchers wrote.

Oct 22, 2020 at 7:51 p.m. UTC
Updated Sep 14, 2021 at 10:22 a.m. UTC

PayPal's pledge to support cryptocurrency as a funding source for 26 million merchants will likely benefit mass cryptocurrency adoption more than it will boost the payments firm's bottom line, Morgan Stanley researchers said in a Wednesday report obtained by CoinDesk.

  • The move "should expand crypto acceptance online, which to date has stalled at 1% of the top 500 internet retailers," wrote the Morgan Stanley analysts.
  • It is "unclear" if PayPal's earnings will benefit from that shift. The researchers said bitcoin, bitcoin cash, litecoin and ether funding is "likely immaterial to earnings."
  • "Assuming PayPal is able to scale its crypto trading activity to Square's current level, it would only add [0.3%] of growth to PayPal's ~$21.3 billion" revenue base for 2020, they wrote.
  • The reason: Boosting crypto acceptance doesn't necessarily mean greater transaction volumes.
  • Other upsides of supporting crypto include staying competitive with Square and attracting "a new user base" to PayPal, the researchers said.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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