PayPal CEO Dan Schulman provided new details about the company’s recent embrace of Bitcoin and other cryptocurrencies on Monday, describing plans for shopping tools as well as potential partnerships with central banks.
Schulman’s remarks, which came during an earnings call after PayPal posted record third quarter revenues, follows the company’s announcement last month that it will soon allow users to buy cryptocurrency within its app.
According to Schulman, starting in the first half of next year PayPal will let users draw from cryptocurrency accounts to pay for goods and servants at 28 million merchants that use the company’s platform. The arrangement, he says, will not result in any incremental fees for either consumers or merchants.
Next year’s expansion will also enable customers to use Venmo, its popular peer-to-peer payment service, to buy and shop with cryptocurrencies.
PayPal’s bullishness on cryptocurrencies, Schulman implied, is based on early response to last month’s crypto offering. He said the size of the waiting list for access to crypto, which is now available to 10% of PayPal customers, was two or three times as great as what the company anticipated. Schulman said the service will be available to all U.S. users in the next few weeks.
On a broader level, Schulman pointed to the fact that companies and central banks are experimenting with cryptocurrencies, and to the utility of digital wallets. Such wallets are often equated with the payment services offered by Apple and Google, but also include apps used to store Bitcoin and other new types of money.
“Digital wallets are a natural complement to all forms of digital currency,” said Schulman, adding that PayPal is in close talks with central banks and regulators to explore new uses for these wallets.
In response to an analyst question, Schulman said PayPal views cryptocurrency systems—which rely on a tamper-proof online ledger known as a blockchain—as cheaper and more efficient than ACH, which is the network that supports the existing banking system.
PayPal is not the only company seeking to bridge the conventional financial system—which Schulman described as “not working” for many low-income people—with the newer world of crypto technology. Last week, cryptocurrency giant Coinbase announced a debit card that can be used at ordinary merchants, while MasterCard in September announced a service to let central banks test out digital currencies.
Despite such efforts, any attempt to introduce cryptocurrency in day-to-day commerce faces a significant obstacle in the form of the U.S. tax system. The Internal Revenue Service treats any crypto transaction as taxable event, like selling a stock or a piece of real estate—meaning a PayPal user who buys a coffee or groceries from a crypto account could be forced to declare a capital gain.
Schulman did not address the tax implications of PayPal’s crypto plans on Monday’s earnings call. Cryptocurrency advocates have been lobbying Congress to create a so-called de minimus exemption that would excuse small-dollar transactions from IRS scrutiny—an effort that has yet to bear fruit.
Cryptocurrency prices have surged in recent months, spurred in part by PayPal’s announcement. The flagship cryptocurrency, Bitcoin, is currently trading around $13,600.
More must-read finance coverage from Fortune:
- What Wall Street needs from the 2020 election
- Trump’s odds of winning have surged in the past 48 hours, according to this data scientist’s model
- How the election results could impact tech investors
- Theft of $2.3M from GOP shows how campaigns are juicy targets for hackers
- A journalist-turned-detective on how corporate America depends on private sleuths