PayPal Re-Enters UK Crypto Market

After announcing in August that it would temporarily suspend its cryptocurrency activities for UK customers, PayPal revealed this week that it had received approval to return to that business. The payments giant said Britain's Financial Conduct Authority (FCA) has approved its registration as a crypto asset operation and the company hopes to return to crypto services sometime in early 2024.

"The UK has been part of PayPal's broader strategy to expand its crypto services to other markets since they first launched there in 2021," he said. James Wester, Director of Digital Assets and Crypto at Javelin Strategy and Research. "Today's announcement demonstrates the challenges companies face when looking to other markets."

When PayPal re-enters the UK market, there will be significant limitations on what it will be able to do with cryptocurrencies. While the FCA has granted PayPal the ability to offer cryptocurrency services, certain requirements and restrictions have been placed on its financial activities. PayPal's crypto services will be restricted to existing customers, who will only be able to hold and sell crypto assets, but not purchase them.

This is very different from the case in the US, where PayPal already offers extensive encryption services. With PayPal, you can send and receive cryptocurrency to and from eligible PayPal confirmed personal accounts in the US and its territories (except Hawaii), or buy, hold, and sell cryptocurrency. It can handle Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, and the company has even launched its own stablecoinalthough that has recently come under regulatory scrutiny by the SEC.

An overview for the main actors

PayPal's resurgence in the UK crypto market indicates that the current landscape is more favorable for larger and more experienced players in this space. Even those players have had challenges dealing with regulatory hurdles, such as the SEC's PayPal subpoena over its stablecoin, but they tend to be better equipped to overcome them.

“Crypto regulations vary from market to market and are still evolving, so companies have new regulations and requirements they must comply with,” Wester said. “Given the immaturity of the space, that will be a challenge that companies like PayPal will face for the foreseeable future. PayPal and other traditional financial services providers have the resources and experience to address compliance challenges in these markets. New entrants may find these challenges more difficult to overcome.”