Cryptocurrency exchange and wallet provider Coinbase has announced the option for residents of the European Union to withdraw their fiat currency using PayPal. The company's blog post specifies that the service will extend to those living in European Free Trade Association (EFTA) countries, meaning Iceland, Liechtenstein, Norway, and Switzerland.
The post explains that before offering this option, EU and EFTA users had to rely on SEPA wire transfers in order to withdraw any fiat funds from Coinbase. In March 2018, Coinbase announced that it had opened a UK bank account. This gave UK users access to the Faster Payments Scheme, allowing them to withdraw from Coinbase and avoid converting their money into euros and then back into pounds through an Estonian bank.
This isn't PayPal's first partnership with Coinbase – the payment system provider teamed up with the exchange to allow US residents to make fiat withdrawals in December 2018 – but it is another turn in the company's interesting relationship with the world of cryptocurrencies and blockchain technology.
Initially, the PayPal and Coinbase partnership began in June 2016 when the exchange allowed US customers to have USD funds from bitcoin sales deposited directly into a PayPal wallet where it could then be withdrawn. In February 2018, however, Coinbase disabled the addition of new credit cards as a payment method on the exchange, and announced that the deposit and withdrawal project would go offline while the two companies worked to "overhaul the entire experience."
In March 2018, the US Patent and Trademark Office published a patent filed by PayPal for an "expedited virtual currency transaction system." The system proposes a secondary wallet to address the slow virtual currency transaction times. Users would have their primary wallet and secondary wallet where funds are stored. By passing private keys to the secondary wallet from senders to receivers, PayPal would be able to reconcile the transactions without interacting with the respective blockchains on which the transactions of each cryptocurrency take place. PayPal would essentially act like an intermediary for these transactions, which seems to conflict with a key ideal of cryptocurrency usage: elimination of the "middle man."
Regardless of what you might infer from the patent, PayPal cofounder Luke Nosek recently spoke about the company's initial interesting in creating its own virtual currency during a talk at the 2019 World Economic Forum:
"Many people don't know this, but the mission of PayPal was to create a global currency that was independent of interference by theses, you know, corrupt cartels of banks and governments that were debasing their currencies. We succeeded at building something that was economically very powerful, enabled by many small businesses, and we're super proud of it, but we never achieved the mission."
Nosek goes on to note that, while PayPal is a very centralized company, it has learned to "play" in the cryptospace. Its work with Coinbase, including overhauling the experience to make it more compatible with the needs of the exchange's users, indicates that maybe PayPal can continue to usher in a wider selection of established companies looking to "play" and improve user experience with the cryptospace.