‘Distressing’: PayPal backs crypto, but worries about bad actors

We are a payments company and a commerce company through and through, so we start with the idea that there are opportunities to improve and enhance the payments experience. I’m sure you’re well aware of this, but for your readers who maybe haven’t experienced what it’s like to load a Metamask wallet, and go through that whole process, it’s really quite painful.

‘We want to make sure that we are operating in a compliant environment, so when I see these things that are happening that harm consumers and give the industry a bad name, certainly that is distressing.’

Edwin Aoki

We see that there are opportunities to really start streamlining the ability to facilitate payments and commerce in the Web3 space.

But that’s just the start: as we get into Web3, we get into programmable payments, and we get into this fundamental building block for financial services.

There are certainly other things I think that can come from it that maybe we haven’t even imagined yet.

Do you have any ideas about what they could be?

I mean it’s mostly speculation, but there are a couple of areas I think could be quite interesting. Around NFTs [non-fungible tokens], I think there are some interesting aspects around not necessarily the collectible space, but the use of NFTs for things like ticketing, where you can enforce uniqueness and actually facilitate legitimate secondary markets. NFTs also have an opportunity to make sure creators and artists continue to reap the benefits of ongoing interest in their work and participate in resale gains.

Another non-payment use case for Web3 is around identity. When you start looking at this idea around decentralised, self-sovereign digital identity, you explore this idea of being able to put users in control of the data that they’re sharing. You can bring together these disparate information sources, like the state government, your employer, your university. Being able to take that and syndicate it in an interesting way that still keeps the user at the centre.

I think when people think about crypto these days, they’re typically thinking about the technology behind it. They’re not thinking about buying their lunch with it. For a company like PayPal, are you still in that mindset of ‘well, maybe people will want to buy their lunch with crypto, and maybe we can facilitate that’?

It is still early days. When we started off with online payments or with using a credit card and tap to pay for a $2 transaction, that was really foreign and really weird. But we constantly do that now, right? So I think that it’s hard to predict exactly where crypto payments will go.

That being said, there are definitely challenges that exist with the most popular cryptocurrencies today around gas fees, throughput, volatility, or access that I think we as an industry need to overcome for this to become a viable payments model.

But I think that we have shown that there is an interest, especially from merchants. Here in Australia, there is an overwhelming view that this will come, and in the US, we did a survey and a vast majority of those folks said that their consumers were asking for digital currency payments.

So I feel that there are some technical challenges that need to be overcome. There are some structural issues around the use of these digital currencies. But it is absolutely the case, I think that we will see them being more useful as a payment mechanism over time.

PayPal is a large, listed company. Do you ever look at the Web3 space and get concerned over the quality of the companies operating in the industry? There’s a great website called ‘Web3 is going just great’ which tracks all the major failures in the space, and it’s regularly talking about some company losing millions in client funds or whatever.

Oh yeah, I’ve seen it.

Does that sort of concern you as a big company looking to make inroads into this space?

Absolutely it concerns us. We are very much for this notion of responsible innovation, the safety of our customers is paramount. We want to make sure that we are operating in a compliant environment, so when I see these things that are happening that harm consumers and give the industry a bad name, certainly that is distressing.

For PayPal, what we can control in the space is how we create and position our offerings ourselves. Our view has been that we’re going to take all the parts that people trust about PayPal and the experience that we have in this space as a regulated company, to try to bring that sensibility into Web3.

On the regulation side of things, we’ve seen some moves in the US against things like Tornado Cash, and some recent announcements in Australia. What’s your view on the moves being made by regulators at the moment?

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We start with the assumption that regulators are well-intentioned. I think that regulators and policymakers, by and large, want to do the right thing for their constituencies. They want to make sure that consumers are protected. They want to make sure that the financial system is structurally sound.

But there is this fine line between making sure that customers are well protected, well-educated and informed about both the opportunities and risks. But at the same time, you want to have a mechanism that really encourages innovation. One that isn’t reacting to the latest headline in the ‘Web3 is going just great’ blog.

For us, it’s a matter of making sure that we’re taking a responsible stance on this. We will see this space evolve, just as we saw, you know, online payments evolve or some of the other things that we take for granted now. And I think that the regulatory and legislative agendas will get there over time.