PayPal invests in crypto-based tax startup

Cryptocurrencies have gained a lot of interest globally over the last 12 months or so, largely due to the steep rally in the price of Bitcoin during this time. However, it is also true that more and more people are understanding how cryptocurrencies work, why they were created, the advantages that they can offer over traditional fiat currencies, and that digital money is probably the future of global monetary systems. Of course, early adopters of Bitcoin have become multi-millionaires due to the stunning price rise since its inception around a decade ago, but the space is still extremely new and open for further interest and investment. This is even more true for cryptocurrencies other than Bitcoin, some of which offer distinct advantages over the most famous crypto, and have other applications as well beyond just being a good investment or a peer-to-peer payments platform. Thus, it is perhaps no surprise that a number of businesses are looking at cryptocurrencies and related sectors now, both as investments as well as for innovation.

One of the companies leading the charge in this space is the payments giant PayPal. PayPal recently announced that it would soon begin to allow cryptocurrencies to be used on its platform, initially in the United States only but with a global rollout expected in the first half of 2021. This means that users can make payments and hold balances in their PayPal accounts in the form of a few cryptocurrencies, including Bitcoin. The transactions themselves will convert the cryptocurrency to the relevant local currency of the merchant or service where the payment is being made, so they will receive fiat currency. However, this is a great way to introduce more and more people to cryptocurrencies, and with PayPal’s user base numbering in the hundreds of millions, we can expect to see this bring more people into the crypto ecosystem once fully launched.

Before looking at PayPal’s other investments in the crypto space, it is also important to see how online merchants, service providers and websites have been driving cryptocurrency adoption as well. Take the online casino industry, for example. There are various online casino providers who have adopted cryptocurrencies, by offering players the option to make bets using crypto. Users can therefore play games such as ethereum roulette, for example, while using crypto also means that transactions are rapid, have extremely low fees, and are safe from hacking and fraud as well. All of these advantages have meant that such casinos have become extremely popular, while also driving people towards bitcoin and other cryptos like ethereum, and this could be the template for online businesses to follow in order to adopt cryptocurrencies in a profitable manner.

In terms of PayPal, the company has also recently invested in TaxBit, which is a startup helping people calculate the taxes owed on their cryptocurrency holdings. PayPal’s venture capital arm has made this investment, along with Coinbase, along with additional funding from the existing investor Winklevoss Capital. TaxBit works to automate cryptocurrency tax compliance for consumers, businesses and exchanges, making it easier for them to comply with crypto tax laws, and has two apps to allow ease of use and access. This is also important for PayPal’s customers, since they will also be able to leverage TaxBit for their own tax liabilities based on crypto holdings once they start making those transactions on PayPal. The investment will be used to take the company international, with its current operations limited to the United States at the moment. Given how complicated tax compliance in general is, and for cryptocurrencies in particular, this service is bound to generate a lot of interest, and once PayPal’s users come on board, it will have a considerable customer base to serve as well, due to which the current investment is a good way to scale up and ensure that the user experience remains top-notch during that time.