PayPal in talks to buy crypto firms including BitGo

It announced that its customers can buy, sell and hold cryptocurrencies on its network

PayPal has obtained a conditional cryptocurrency licence from the New York State Department of Financial Services and partnered with New York-based FinTech start-up Paxos to deliver cryptocurrencies to its users. AP
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PayPal is exploring acquisitions of cryptocurrency companies including Bitcoin custodian BitGo, according to people familiar with the matter, a move that would expand its embrace of digital coins.

PayPal has been holding talks with California-based BitGo, a company that helps investors store Bitcoin securely, and could reach a deal within weeks, the people said, asking not to be identified because the matter is private. Talks could still fall apart and PayPal could opt to buy other targets, the people added.

It couldn’t be learned how much PayPal would pay for BitGo if it goes ahead with the deal. BitGo raised $58.5 million in 2018 at a $170m valuation, according to market research firm PitchBook.

Representatives for BitGo and PayPal declined to comment.

Founded in 2013 by its chief executive Mike Belshe, BitGo offers digital wallets that require multiple signatures for transactions, as well as offline vaults for storing Bitcoin and rival currencies. It was one of the first companies in the space to focus on institutional investors, according to its website.

The company applied in August to New York regulators to become an independent, regulated qualified custodian under New York State Banking Law, a press release showed. Custodians like BitGo are responsible for safekeeping digital assets using secure storage.

PayPal announced on Wednesday that its customers can buy, sell and hold cryptocurrencies including Bitcoin, Ether, Bitcoin Cash and Litecoin from digital wallets, as well as use the virtual money to shop at the 26 million merchants on its network. The announcement led Bitcoin to surge past $13,000 for the first time since July last year.

PayPal said it would partner with BitGo competitor Paxos Trust Company, a regulated provider of cryptocurrency products and services for its new service.

BitGo is backed by investors including Goldman Sachs, Craft Ventures, Digital Currency Group, Galaxy Digital Ventures, Redpoint Ventures, Valor Equity Partners and Founders Fund.