The general interest in cryptocurrencies is becoming increasingly evident as large online payment systems like PayPal increasingly offer support for digital currencies. While this is a revolutionary step for both crypto and traditional finance, meeting regulatory requirements is vital for such companies to be able to support cryptocurrencies.
That year, PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services enables the purchase of Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).
At first glance, It appears that PayPal has met the basic requirements to support digital currencies. What is really notable, however, is that PayPal, a company with a market capitalization of more than $ 127.58 billion as of December 2019, partnered with the financial institution Paxos to ensure the delivery of its cryptocurrency service. regulated specialized in digital assets.
Bob Reid, CEO and co-founder of Everest, a fintech company that helps financial institutions comply with legal requirements, told Cointelegraph that it was impressive that a company as large as PayPal had partnered with Paxos. “”PayPal was considering implementing digital currencies and decided that it would require a partnership with a digital asset company to do so.“He said. Going forward, Reid believes PayPal will at some point need to partner with a cryptocurrency administrator who does cold wallet storage, adding:
“I think we’ll see a lot of traditional players like banks and large payment providers affiliated with cryptocurrency custodians. PayPal will be available first, and then other banks and financial institutions will follow.”
As another example of the collaboration between the crypto and traditional sectors, Everest recently partnered with BRI Remittance, a subsidiary of one of the largest banks in Indonesia, to provide users with a blockchain-based platform that enables Indonesians and Europeans to easily exchange value across international borders. Reid said the company is now also working with the Bank of Papua New Guinea.
Companies receive regulatory support for cryptocurrencies
It’s noteworthy that PayPal has worked with Paxos to ensure compliance with digital currency regulations. However, it’s also important to note that smaller payment providers around the world are following suit. But still, These companies have a different method of ensuring regulatory compliance.
South Korean payment provider Danal Fintech – a subsidiary of Danal, one of South Korea’s largest payment companies – recently announced that its digital Paycoin application will integrate Icon’s cryptocurrency (ICX). This allows Paycoin users in Korea to pay with ICX at any of Danal’s 60,000 business partners, including large retailers like 7-Eleven, KFC and Domino’s Pizza.
Ted Hwang, CEO of Danal Fintech, told Cointelegraph that the subsidiary first launched its Paycoin service in April 2019, making it one of the first companies to use virtual assets for retail payments in Asia. Hwang said it was difficult to accept cryptocurrency from retailers, even though Danal owns around 50% of the cell phone payments market share in Korea – the equivalent of $ 5.5 billion a year.::
“There are various factors and issues, such as whether cryptocurrencies are accepted as a legal payment method in this country or whether a local micropayment license is required to provide this service.”
To address these issues, Hwang stated that Danal Fintech has decided to offer fiat currency billing to its partner dealers. “”Local traders and our local partners receive comparisons with legal tender via Danal, regardless of whether cryptocurrency is used or not“he said. Hwang went on to explain that this process is no different from existing payment solutions in terms of settlement, and noted that this has helped overcome the regulatory hurdles facing regions like Asia.
Interestingly, it seems to be a preferred concept to allow retailers to accept cryptocurrency payments and still receive settlements in fiat money. Merrick Theobald, vice president of marketing at cryptocurrency payment service provider BitPay, told Cointelegraph that while crypto payments are growing in importance, many companies still prefer to only trade in fiat format. But still, Theobald stated that many customers, employees, affiliates, and contractors see the value of cryptocurrencies, especially when it comes to payments, as “the demand for faster, easier, and cheaper payment options grows”.
BitPay recently launched a service called BitPay Send, which enables companies to pay their employees in cryptocurrencies, and which ensures that a company never has to buy, own, or manage cryptocurrencies itself. However, a company’s employees can still receive payments in cryptocurrencies like Bitcoin. “Businesses continue to delve into the fiat currency they are most comfortable with while meeting the demand for cryptocurrency payments coming from their customers, employees, affiliates and more,” Theobald said.
Regarding the regulations, Theobald announced that BitPay Send uses a process identical to the one the company uses for its payment service, which has already processed nearly 100,000 transactions per month this year. When using this service, regulatory and compliance reviews are conducted for businesses and consumers in accordance with applicable laws. Since BitPay is based in the US, the company is also regulated by the Financial Crimes Enforcement Network (FinCEN) for its acronym in English.
Understand the regulations of new technologies that use cryptocurrencies
It is also interesting that financial institutions are adopting and using new technologies that use cryptocurrencies. For example, Hong Kong technology company XanPool has just launched a product called XanPay.
Jeffery Liu, CEO of XanPool, told Cointelegraph that XanPool is client-to-client software that enables individuals to automate their financial transactions on their bank accounts, electronic wallets, and cryptocurrency wallets. “”Users can also automate their cryptocurrency transactions and even benefit from such transactions“Liu said. He went on to explain that once users connect their financial infrastructures to XanPool, a network is activated that can transfer and liquidate capital without limits.
According to Liu, XanPay is used by various payment service providers and marketplaces on a white label basis. He mentioned that XanPay’s parent company, XanPool, is currently waiting in various offshore countries to approve licenses for activities such as activating e-wallets and payment systems.