Strategic crypto investments are expected to have a limited near-term effect on the credit profiles of companies such as PayPal, Visa, Square, and Mastercard, taking into account the modest capital deployed and the long ramp time, major credit rating agency firm Fitch Ratings said. Moreover, adding crypto capacities opens up incremental revenue streams for these companies, even if the return on investment over time and compliance risks remain uncertain, they added.
Of the four companies, only PayPal is publicly rated, and its BBB+/Stable rating takes the company’s plans to expand its crypto capabilities.
“The company plans to launch pay with crypto functionality at its 29 million merchants starting in the US in late 1Q21 and then expand internationally. This represents one of the first real-world, non-trading related use cases at scale for crypto in the US, but consumer usage will ultimately dictate its success,” Fitch said in their recent analysis.
Meanwhile, Square added the ability to trade bitcoin on its Cash App in 2017 and is on pace to realize more than USD 100m of annualized gross profit from bitcoin trading.
Last October, PayPal launched its cryptocurrency investing service, enabling US users to buy and sell crypto directly within their PayPal digital wallets. Also, as reported last week, PayPal will “probably” not be following Tesla’s lead in bitcoin (BTC) buying just yet — but it will spare no effort in allowing its customers to fill their boots with crypto-related offerings.
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