PayPal has announced that it now holds $943 million in customers’ crypto assets, representing a 56% increase from the previous quarter. The company allows users in some regions to buy, hold, sell, and pay for purchases using cryptocurrency. However, PayPal doesn’t hold any cryptocurrencies on its balance sheet other than those belonging to its customers.
According to the latest Q1 2023 Form 10-Q SEC filing, customers’ crypto deposits surged from $604 million in the prior quarter to $943 million as of March 31. Bitcoin was the most popular cryptocurrency in terms of current holdings and quarter-over-quarter percentage increase, spiking 71% to just short of half a billion dollars. Ethereum, the second-most held cryptocurrency, saw a 45% increase in deposits, while “Other,” consisting of Bitcoin Cash and Litecoin, saw gains of plus 30%.
PayPal noted that accounting for cryptocurrency involves several risks, including technological, legal, and regulatory risks, which is why crypto assets are recorded as both a liability and an asset on their books.
Although the total crypto market experienced a significant increase of 49%, rising from $796 billion on December 31, 2022, to $1,183 billion on March 31, 2023, the exact breakdown of PayPal customers’ holdings is unclear.
Therefore, it is uncertain precisely how much of the 56% quarter-over-quarter increase in deposits relates to increased crypto holdings or the increase in dollar value over that period. However, the majority of the increase likely relates to an increase in the dollar value of holdings rather than a jump in customers’ deposits.
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