PayPal, a leading financial technology company, recently disclosed its cryptocurrency holdings as part of its quarterly report filed with the United States Securities and Exchange Commission. The report revealed that PayPal held a combined total of $943 million in cryptocurrency assets as of March 31, 2023. This represents a 56% increase from the company’s previous quarter, in which it disclosed holdings of $604 million.
According to the report, PayPal’s reported financial liabilities for the first quarter of 2023 were $1.2 billion, with crypto assets making up 77.9% of that total. This represents an increase of over 10% from the fourth quarter of 2022, suggesting that PayPal is increasingly betting on cryptocurrency as a viable investment vehicle.
Despite its growing crypto holdings, PayPal considers its cryptocurrency assets a “safeguarding liability” due to the unique risks associated with cryptocurrencies. The disclosure also indicates that the specific cryptocurrencies held by the company remain unchanged since the last quarter. These cryptocurrencies include Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
Custody of the assets PayPal holds on behalf of its customers remains limited to third-party holding companies. This presents a liability for customers in the event that third parties are unable to process transactions. However, PayPal has not yet incurred any safeguarding loss events to date, and the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value as of March 31, 2023.
The breakdown of PayPal’s cryptocurrency assets for the first quarter of 2023 includes $499 million in Bitcoin (BTC), $362 million in Ether (ETH), and $82 million composed of Bitcoin Cash (BCH) and Litecoin (LTC). This represents a significant increase from the previous quarter, in which PayPal held $291 million in Bitcoin, $250 million in Ether, and $63 million in Bitcoin Cash and Litecoin.
In addition to its growing cryptocurrency holdings, PayPal’s profitability has also increased in the first quarter. On a generally accepted accounting principles (GAAP) basis, the company disclosed per-share earnings of $0.70, up from $0.43 in the first quarter of 2022. On a non-GAAP basis, PayPal’s per-share earnings were $1.17, up from $0.88 in the first quarter of 2022.
It’s worth noting that PayPal’s disclosure of its crypto holdings comes at a time of increased interest in cryptocurrency from institutional investors. In recent years, major financial institutions and corporations have increasingly shown interest in digital assets, with some even adding them to their corporate treasuries. PayPal’s continued investment in cryptocurrency suggests that digital assets are becoming increasingly mainstream and may play a more significant role in the future of finance.
In conclusion, PayPal’s disclosure of its cryptocurrency holdings highlights the company’s growing investment in digital assets. While cryptocurrency remains a relatively new and volatile asset class, it’s clear that major players like PayPal are increasingly taking notice and investing accordingly. As the digital asset space continues to evolve, it will be interesting to see how other financial institutions and corporations respond and adapt to this rapidly changing landscape.