PayPal's Q1 2023 crypto holdings soar by 56 percent

The majority of the fintech's crypto assets are in BTC and ETH, which are worth $499 million and $362 million, respectively

By Shashank Bhardwaj

Published: May 10, 2023 07:20:04 PM IST

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PayPal, a company specialising in financial technology, recently sent a quarterly report to the US Securities and Exchange Commission that included specifics about the company's crypto holdings.

The report indicates a 56 percent growth over the company's previous quarter, in which PayPal disclosed a total of $604 million in crypto asset holdings, claiming a combined total of $943 million in crypto assets as of March 31, 2023.

This quarter, PayPal reported total financial liabilities of $1.2 billion, with crypto assets making up 77.9 percent of those liabilities. This is an escalation of more than 10% over the company's stated fourth-quarter liabilities in 2022.

The report states that due to the "unique risks connected with crypto assets," PayPal views its crypto holdings as a "safeguarding liability." The filing also reveals that the particular crypto assets held by the business have remained the same as in the previous quarter.

Customers of PayPal in particular areas are given the ability to buy, hold, sell, receive, and send specific crypto, as well as use the money from the sale of crypto to pay for items when they check out of an online store. Ethereum, Bitcoin, Bitcoin Cash, and Litecoin are the four crypto that make up this group, which PayPal refers to collectively as ‘our clients' crypto assets.

Third-party holding corporations are the only ones authorised to keep custody of the assets that PayPal has acquired on behalf of its users. Although this entails a responsibility for consumers in the event that third parties are unable to complete transactions — a remark carried over from the filing made during the previous quarter — the filing also states that no such defect has yet occurred.

As of March 31, 2023, the company had not suffered any safeguarding loss events; hence, the value of the crypto asset safeguarding liability and the value of the corresponding safeguarding asset was recorded as being the same.

The breakdown of PayPal's crypto assets for the first quarter of 2023 includes the following:

> $ 499 million worth of Bitcoin (an increase from December's $291 million).

> $ 362 million worth of Ether (an increase from $250 million).

> $ 82 million worth of Bitcoin Cash and Litecoin combined.

Additionally, PayPal saw an upsurge in its profitability during the first quarter. In accordance with the generally accepted accounting standards (GAAP), the firm reported earnings per share of $0.70, which is a ramp-up from $0.43 reported in the first quarter of 2022. The non-GAAP calculation of PayPal's earnings per share came in at $1.17, which is a significant increase over the previous quarter's figure of $0.88.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash