Fintech company PayPal recently revealed its cryptocurrency holdings in a quarterly publication. report filing with the Securities and Exchange Commission (SEC).
Claiming a combined total of $943 million in cryptocurrency assets as of March 31, 2023, the filing shows a 56% increase over the company's previous quarter where PayPal revealed $604 million.
PayPal's reported total financial liabilities for this quarter were $1.2 billion, with crypto assets accounting for 77.9%, up more than 10% from Q4 2022 reported liabilities.
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According to the report, PayPal considers its crypto assets a "protective responsibility" due to the "unique risks associated with cryptocurrencies." The disclosure also indicates that the specific cryptocurrencies held by the company remain unchanged from the last quarter:
"We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies, as well as use proceeds from cryptocurrency sales to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash and Litecoin (collectively, "Our Clients' Crypto Assets")."
Custody of assets held by PayPal on behalf of its customers remains limited to third-party holding companies. PayPal acknowledges that this presents a liability to customers in the event third parties are unable to process transactions (a statement retained from last quarter's filing); however, the presentation also indicates that such a failure has not yet occurred:
"As of March 31, 2023, the Company has not incurred any protection loss events and therefore the crypto asset protection liability and the corresponding protection asset were recorded at the same value."
The Q1 2023 cryptocurrency asset breakdown for PayPal includes $499 million in Bitcoin (up from $291 million in December), $362 million in Ether (up from $250 million), and $82 million comprised of Bitcoin Cash and Litecoin (versus $63 million).
PayPal's profitability also increased in the first quarter. On a GAAP basis, the company reported earnings per share of $0.70, up from $0.43 in the first quarter of 2022. On a non-GAAP basis, PayPal's earnings per share were $1.17, up from $0 .88 in the first quarter of 2022.
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