PayPal disclosed it holds $943 million in customers’ crypto assets, up 56% from the previous quarter.
The company enables users in some regions to buy, hold, sell, and pay for purchases using cryptocurrency. However, PayPal doesn’t have any cryptocurrencies on its balance sheet other than those belonging to its customers.
PayPal customers up their deposits
In its latest Q1 2023 Form 10-Q SEC filing, the online payments firm revealed that customers’ crypto deposits jumped from $604 million in the prior quarter to $943 million as of March 31.
The table below shows Bitcoin was the most popular in terms of current holdings and quarter-over-quarter percentage increase – spiking 71% to just short of half a billion dollars.
The pattern repeated, with the second-most held cryptocurrency, Ethereum seeing a 45% increase in deposits. While “Other,” consisting of Bitcoin Cash and Litecoin, saw gains of plus 30%.
PayPal stated that the risks of accounting for cryptocurrency, including “technological, legal, and regulatory risks,” meant crypto assets are recorded as both a liability and an asset on their books.
Last year was a tumultuous one for cryptocurrency, characterized by CeFi bankruptcies, particularly the FTX scandal.
Nonetheless, by the first quarter of 2023, the total crypto market cap saw a significant increase of 49%, rising from $796 billion on December 31st, 2022, to $1,183 billion on March 31st, 2023 – suggesting the market has recovered to a degree.
Without a detailed breakdown of PayPal customers’ holdings, it is unclear 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, using the crude measure of a 49% increase in total market cap between quarters, it is probable that the majority of the increase relates to an increase in the dollar value of holdings – rather than a jump in customers’ deposits.
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