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Financial technology company PayPal recently disclosed its cryptocurrency holdings in a quarterly report filed with the United States Securities and Exchange Commission.
The filing reveals that PayPal held a combined total of $943 million in cryptocurrency assets as of March 31, 2023. This represents a 56% increase from the previous quarter, when the company disclosed holdings of $604 million.
PayPal’s reported total financial liabilities for this quarter stood at $1.2 billion. Cryptocurrency assets accounted for 77.9% of this figure, an increase of more than 10% from the fourth quarter of 2022.
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According to the report, PayPal classifies its crypto assets as a “safeguarding liability” due to the “unique risks associated with cryptocurrencies.” The disclosure also confirms that the specific cryptocurrencies held by the company remain unchanged from the previous quarter:
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“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’).”
Custody of the assets PayPal holds on behalf of its customers remains limited to third-party holding companies. PayPal acknowledges that this structure presents a liability for customers in the event that third parties are unable to process transactions—a statement carried over from last quarter’s filing. However, the filing indicates that no such fault has occurred to date:
“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 Q1 2023 cryptocurrency asset breakdown for PayPal includes $499 million in Bitcoin (BTC), up from $291 million in December; $362 million in Ether (ETH), up from $250 million; and $82 million composed of Bitcoin Cash (BCH) and Litecoin (LTC), up from $63 million.
PayPal’s profitability also increased in the first quarter. On a generally accepted accounting principles (GAAP) basis, the company reported per-share earnings of $0.70, up from $0.43 in the first quarter of 2022. On a non-GAAP basis, PayPal’s per-share earnings were $1.17, up from $0.88 in the first quarter of 2022.
