TLDR
- PayPal now supports Bitcoin, Ether, and PYUSD for P2P transfers between users.
- PayPal Links allows users to send personalized payment requests for crypto.
- PYUSD, PayPal’s stablecoin, now serves as the backbone for crypto payments.
- PayPal will expand crypto transfers globally after initial U.S. launch.
PayPal has announced a major update to its peer-to-peer (P2P) payment system, introducing support for cryptocurrencies such as Bitcoin (BTC), Ether (ETH), and its own stablecoin PYUSD. The new feature allows users to send and receive digital assets directly via the PayPal app. The announcement marks a significant step in mainstreaming cryptocurrency use beyond trading and investment.
The new feature, called PayPal Links, enables users to share one-time personalized links via text, email, or chat. These links allow recipients to easily send crypto payments, streamlining the transfer process. Initially, the feature will launch in the U.S. before expanding to other countries, including the UK and Italy, later this year. PayPal’s move is seen as an effort to increase cryptocurrency adoption by simplifying transactions and expanding its user base.
PYUSD and Expanded Crypto Options
As part of its push into digital assets, PayPal also highlighted the role of its stablecoin, PYUSD. This dollar-pegged stablecoin, launched in 2023, has gained traction, with a market cap nearing $1.3 billion.
The integration of PYUSD into PayPal’s P2P system adds further utility to the stablecoin, allowing for seamless transactions across its platform.
Along with PYUSD, PayPal will also support Bitcoin, Ether, and other compatible digital assets for peer-to-peer transfers. This update positions PayPal as one of the few mainstream financial services to incorporate direct crypto transactions in its payment ecosystem, providing users with more flexibility in their payments.
P2P Crypto Transfers and Tax Reporting
A notable feature of PayPal’s new P2P crypto transfers is the tax-exempt status of personal transactions. According to PayPal, transfers made between friends and family will not trigger 1099-K tax reporting, which typically applies to commercial transactions.
This is an important step in simplifying the use of crypto for everyday transactions, as it reduces the tax burden for users who wish to send gifts, reimbursements, or split expenses with family and friends.
For many crypto users, the tax implications of transactions have been a source of concern. PayPal’s decision to exclude personal transfers from tax reporting is expected to make crypto usage more appealing for everyday payments, further driving adoption among mainstream consumers.
Expanding PayPal’s Crypto Ecosystem
PayPal’s crypto integration is part of a broader effort to build out its crypto ecosystem. In 2020, PayPal began allowing users to buy, sell, and hold cryptocurrencies on its platform. This was followed by the introduction of the “Pay with Crypto” feature in 2023, which enables U.S. businesses to accept crypto payments using PayPal’s infrastructure.
The new P2P crypto functionality complements these existing services and provides users with more ways to interact with digital assets.
PayPal is not the only major player entering the crypto payment space. Other financial institutions and payment providers are increasingly adding support for cryptocurrencies. PayPal’s introduction of P2P crypto payments signals its commitment to remaining a key player in the evolving digital payments landscape.
