On Wednesday (October 21), shortly after PayPal Holdings, Inc. announced its plans to support cryptocurrencies, Meltem Demirors, Chief Strategy Officer of digital asset investment firm CoinShares, talked about the implications of this move for the crypto space. Meltem’s comments came during an interview on CNBC’s “Fast Money” show.
Meltem was first asked why she believes that PayPal’s plans to support cryptocurrencies by allowing their customers to buy, sell, hold, and spend crypto (initially BTC, BCH, ETH, and LTC) is so significant.
“Yeah, so look, Square’s been really exciting. A number of different FinTechs including Revolut and Robinhood also offer crypto, but what’s really exciting here is [that]Venmo, which is owned by PayPal, has 300 million active users.
“They’re millennials; so, they’re all the target audience for Bitcoin. They are the type of investors who are interested in holding Bitcoin. So, in terms of retail exposure to digital currencies, PayPal is the largest distribution channel available in the United States, and their willingness to include cryptocurrency in their offering is phenomenally exciting. It’s going to be a huge on-ramp for consumers.”
Meltem was then asked if we are at a stage where crypto needs to be widely accepted by merchants.
“No, not really. Look, the important thing to remember in this initial iteration of this offering is [that] it’s really going to be a walled garden, meaning that cryptocurrencies are not going to leave the PayPal environment.
“So nobody is bringing in crypto from outside the PayPal environment… and eventually I think this is paving the way for PayPal launching its own cryptocurrency. If you recall PayPal was part of the initial Facebook Libra Consortium. They dropped out this time last year actually, and so I wouldn’t be surprised if in the next six to 12 months, we see PayPal launching its own digital currency similar to a digital dollar that we see in many payments companies in the Asia Pacific region in particular.”
She then talked about what CoinShares is seeing in terms of institutional interest in Bitcoin:
“At CoinShare, we now manage a billion dollars in cryptoassets , and largely what we’ve seen is [that] institutions are not really yet ready to engage with Bitcoin. Many of them are interested. They’re learning, but until someone takes the first step, they’re not going to be the first to move and start allocating to Bitcoin or launching Bitcoin products.
“So in the interim, I think the first step we have is corporates embracing Bitcoin as a new revenue center. Obviously, 3% of Square’s gross profit is now driven by crypto sales on Cash App. That’s really promising. Other corporates have added Bitcoin to their balance sheets. Square announced they put half a percent of their corporate cash into Bitcoin.
“So I think in the near term, a lot of what we’re seeing is those initial bridges between Bitcoin and the broader payments ecosystem being built out, and over time, I do think we’ll see more meaningful engagement from other financial institutions who see a hugely lucrative opportunity by offering crypto products and services not only to retail consumers and speculative traders, but also to institutions that want to hold it long-term and were buying into this store of value narrative, particularly in the current zero interest rate environment.”