PayPal gets FCA approval to offer crypto services in the UK

Payments behemoth PayPal has gotten the green light to offer cryptocurrency services in the UK. Its name appeared on the official website of the country’s regulator, Financial Conduct Authority (FCA), on Tuesday.

PayPal UK Limited can now act as a crypto service provider as it is permitted to engage in “certain crypto asset activities“. It can also advertise its services to local clients.

From 10 January 2020, the FCA had made it mandatory for firms carrying out specific crypto asset activities in the UK to comply with the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs).

It also requires crypto asset businesses to be registered with the financial regulator if they intend to provide certain cryptocurrency services by way of business in the country.

With the latest registration, PayPal can also approve its own crypto-related communications under the recently imposed marketing regime. Recently in August, PayPal had temporarily paused crypto purchases in the UK to comply with the regime. Its official statement said-

“We remain deeply committed to our compliance obligations and PayPal consistently works closely with regulators around the world to adhere to applicable rules and regulations in the markets in which we operate.”

In June, the UK government had passed the Financial Services and Markets Act 2000 (Financial Promotion). The regulation brought certain qualifying crypto assets within scope of the UK’s existing financial promotion rules.

Here, the financial promotion is defined broadly as “an invitation or inducement to engage in investment activity, communicated by a person in the course of business”.

After the act was passed, the definition of investment activity was expanded to include dealing in, managing, arranging and advising upon certain qualifying crypto assets, bringing them within scope of the financial promotion regime for the first time.

Last month, PayPal had announced the launch of a new feature to sell crypto. This was facilitated through its new on – and off – ramps for Web3 payments being integrated with MetaMask and other Web3 apps.

However, this move only allowed US-based users to convert their crypto holdings into US dollars. While the payments company had previously launched its on-ramp tools to let US customers buy crypto straight from their PayPal accounts, the new off-ramps offered investors to change their crypto into US dollars in their PayPal accounts.

Users are now utilising this feature to shop, send money, save, or move it to their bank. PayPal’s official press release on the day of launch said: “Once integrated, web3 merchants can help grow their user base by connecting to PayPal’s fast and seamless payments experience trusted by millions, while leveraging PayPal’s robust security controls and tools for fraud management, chargebacks and disputes.”

The month of August also saw PayPal issuing its own US dollar-pegged stablecoin called PayPal USD ($PYUSD) on the Ethereum blockchain. Major cryptocurrency exchanges like Coinbase welcomed this by listing it on their platforms. The stablecoin also enjoys listings on other exchanges like Huobi, Kraken and Crypto.com.