The first quarter report season reveals significant growth in PayPal's crypto holdings.
PayPal's cryptocurrency holdings experienced a 36% boost in Q1 2023, approaching a staggering $1 billion.
The financial technology giant recently revealed its crypto asset holdings in a quarterly report submitted to the United States Securities and Exchange Commission (SEC).
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As of March 31st, 2023, PayPal held a total of $943 million in cryptocurrency assets, marking a significant increase from the previous quarter's $604 million.
In terms of total financial liabilities, PayPal reported $1.2 billion for the quarter, with crypto assets constituting 77.9% of that figure, an increase of over 10% compared to Q4 2022.
The report classifies the company's crypto assets as a "safeguarding liability," citing " unique risks associated with cryptocurrencies." Notably, the specific cryptocurrencies held by PayPal remained unchanged from the previous quarter:
We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin (collectively, 'our customers' crypto assets').
PayPal's crypto assets are held in custody by third-party holding companies, which presents a liability for customers if these third parties fail to process transactions. However, the filing also notes that no such issue has ever occurred.
As of March 31, 2023, the Company has not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value.
The breakdown of PayPal's Q1 2023 crypto assets includes $499 million in Bitcoin (BTC), $362 million in Ether (ETH), and $82 million in a combination of Bitcoin Cash (BCH) and Litecoin (LTC).
Additionally, PayPal's profitability also saw an increase in the first quarter, with generally accepted accounting principles (GAAP) per-share earnings reaching $0.70 and non-GAAP per-share profits at $1.17.
PayPal's rapidly growing crypto holdings highlight the increasing importance of digital assets within the fintech industry.
