Fintech firm PayPal recently disclosed its cryptocurrency holdings in its quarterly report to the US Securities and Exchange Commission.
Cryptocurrency assets totaled $943 million as of March 31, 2023, a 56% increase from the $604 million disclosed by PayPal in the company's previous quarter, the filing said. Crypto assets accounted for 77.9% of PayPal's reported total financ ial liabilities for the quarter of $1.2 billion more than 10% higher than the liabilities reported in the fourth quarter of 2022.
According to the report, PayPal views its crypto assets as a “duty to protect” due to “unique risks associated with cryptocurrencies.” The disclosure also revealed that specific cryptocurrencies held by the company remained unchanged from the previous quarter:
“We allow customers in certain markets to buy, hold, sell, receive and send certain cryptocurrencies, as well as use proceeds from cryptocurrency sales to pay for purchases at checkout. These cryptocurrencies include Bitcoin, Ethereum, Bitcoin Cash and Liteco in (collectively, ' Our Clients' Crypto Assets')."
Custody of assets held by PayPal on behalf of its customers remains limited to third-party holding companies. PayPal acknowledges that this creates liability for customers if a third party is unable to process a transaction a statement filed last quarter however, the document also indicates that Such errors have yet to occur: "As of March 31, 2023, the company has not experienced any covered loss events, and therefore, the crypto asset covered liability is recorded at the same value as the corresponding covered asset."
PayPal's Q1 2023 breakdown of crypto assets includes $499 million in Bitcoin (up from $291 million in December), $362 million in ether (over $250 million), and $82 million consisted of Bitcoin Cash and Litecoin (above $63 million). PayPal's pro fitability also grew in the first quarter. According to generally accepted accounting principles (GAAP), the company reported EPS of $0.70, up from $0.43 in the first quarter of 2022. On a non-GAAP basis, PayPal earned $1.17 per share, up from $0.88 in the first quarter of 2022. first quarter of 2022.
