PayPal’s Regulatory Affairs Hiring Hints At Cryptos’ Retail Challenges

The growth in job listings at tech behemoths — positions dedicated to the development of cryptocurrencies to be used in larger, presumably retail settings — may be the latest signal that bitcoin and other offerings will be mainstream before too long.

One recent posting hints at the challenge of getting to that stage, where cryptos are ubiquitous payment choices, functioning alongside (and within) virtual wallets and cards.

As noted in this space, PayPal boosting staffing efforts at its  regulatory affairs unit focused on crypto. Jesse Spiro, a former Chainalysis head of policy and regulatory affairs, will head to PayPal’s crypto division beginning early next month.

PayPal, of course, has allowed users to buy and sell bitcoin since last fall, and in recent months has said that crypto will be spendable at the company’s 26 million merchants this year. Though PYMNTS research has shown there is demand to use crypto for everyday spending — 18 percent of the adult population is likely to use cryptocurrency to make a purchase, which translates to some 46 million consumers, including 17 million non-owners — there are still some regulatory hurdles to be, well, hurdled.

As we reported over the weekend, other commerce behemoths are examining the lures and roadmaps of featuring crypto more prominently within retail. Amazon has posted a job listing seeking a digital currency and blockchain product lead.

Spiro and his team — indeed, any company looking to get crypto more firmly entrenched among the masses — have their work cut out for them. In part that’s due to the fact that a pantheon akin to an alphabet soup of regulators is looking at the space — hinting at guardrails, some restrictions and frameworks (well beyond crypto trading) that will be crafted along the way.

Volatility — And Competition  

For one overarching concern, it remains to be seen whether we’ll be getting a digital dollar here in the States, as the Fed continues to explore the issue. We’ll see a discussion paper later in the year on the subject. The continued volatility of the cryptos themselves have drawn scrutiny in the marbled halls of the Capitol. As noted last month, U.S. Sen. Elizabeth Warren (D-Mass.), said at a hearing that cryptocurrencies “are a lousy way to buy and sell things. Unlike the dollar, their value fluctuates wildly depending on the whims of speculative day traders.” A central bank digital currency (CBDC), she said, would be more efficient.

We note that a CBDC, or a wider embrace of stablecoins — especially if promoted through legislation — would foment competition for cryptos, and might stymie efforts such as PayPal’s to broaden merchant acceptance.

Exchanges, Too

If, for now, at least, the crypto exchanges are the point of access for cryptos — where they are bought and sold, and tied to digital wallets — then it follows that regulation of those exchanges remains an area to be closely watched (by PayPal and others). And back in May, Securities and Exchange Commission (SEC) Chairman Gary Gensler said at a public hearing, “Right now, these exchanges do not have a regulatory framework at the SEC or at our sister agency, the Commodity Futures Trading Commission [CTFC]. Right now, there’s not a market regulator around these crypto exchanges, and thus, there’s really no protection around fraud or manipulation.”

Taxes  

Tax policy may be fluid, and of course represents a regulatory challenge. Today, bitcoin and other holdings are treated like assets, and using them (or the proceeds from trading, say, bitcoin) can give rise to a taxable event tied to short-term capital gains or losses. There is at least (still) some debate over whether cryptocurrencies are securities or currencies, and the SEC is carving a path here.

The Treasury, as PYMNTS reported, is tightening its oversight of cryptos, where crypto-related business transactions above $10,000 to be reported to the IRS. Tax evasion is also squarely in the department’s sights.

PayPal’s crypto-focused regulatory affairs team — Spiro, et al — will have some busy days ahead.