Venmo, the payment service is allowing its users to buy, hold and sell cryptocurrencies on its app, a step that could inspire more mainstream adoption of the asset class.
Venmo owned by PayPal Holdings Inc (PYPL.O), will show users a new feature that lets them invest in four different cryptocurrencies — bitcoin, ether, Litecoin, and bitcoin cash for spending as little as $1. They can also share their crypto purchases with friends through Venmo’s social feed.
With more than 70 million customers, Venmo is one of the most popular payment apps in the United States, especially among younger consumers who use it to pay friends and family. It processed around $159 billion in payments last year.
Venmo is one of the most popular payment apps in the United States, especially among younger consumers who use it to pay friends and family. It has more than 70 users and processed around $159 billion payments last year.
California-based PayPal has come to be one of the most active mainstream financial companies in cryptocurrencies.
In October, it began allowing users to buy, sell and hold cryptocurrencies in its digital wallets and last month it started allowing customers to spend their virtual coins at millions of merchants worldwide.
These launches helped to fuel a rally in virtual currencies. Bitcoin has soared nearly 90% since the start of this year, boosted by interest from larger financial firms betting on its greater adoption and use as a hedge against inflation.
Venmo’s crypto launch also coincides with increased competition in the U.S. peer-to-peer payments sector.
Square Inc’s rival Cash App, which has allowed cryptocurrency purchases since 2018, has seen user growth boom over the last year. Other financial technology startups popular with young consumers, such as broker Robinhood also allow crypto buying and selling.
More than 30% of Venmo customers have purchased crypto or equities, 20% of which started buying during the pandemic, the 2020 Venmo Customer Behavior Study found.
“No matter where you are in your cryptocurrency journey, crypto on Venmo will help our community to learn and explore cryptocurrencies on a trusted platform and directly in the app they know and love,” said Darrell Esch, a senior vice president, and general manager of Venmo.
Esch added: “Our goal is to provide our customers with an easy-to-use platform that simplifies the process of buying and selling cryptocurrencies and demystifies some of the common questions and misconceptions that consumers may have.”
Crypto on Venmo is enabled through PayPal’s partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services.
Bitcoin and other digital currencies have risen in price in 2021 on the back of increased interest from institutional investors, although major companies like Tesla and PayPal have also made substantial roles in the space. Tesla purchased $1.5 billion worth of bitcoin earlier this year and now accepts it as payment for its cars.
PayPal, for now, has been increasing its investments in crypto. Last month, the payments giant said it had agreed to buy Curv, which helps clients store their digital tokens securely, for around $200 million. It has also launched a new business unit focused on blockchain, which Curv is set to join.
Venmo said its crypto feature was developed in partnership with blockchain infrastructure firm Paxos, which PayPal has also used for its other digital asset projects. New York regulators last year awarded a license to PayPal to engage in crypto activities.
Though bitcoin bulls see it as a store of value akin to gold, not everyone is convinced by the digital currency’s stunning comeback — it previously sank as low as $3,122 in 2018 after climbing to almost $20,000 a year earlier. Skeptical economists view bitcoin as a bubble waiting to burst.