PayPal is unlikely to invest in cryptocurrencies says CFO

PayPal CFO John Rainey on Thursday said the company is unlikely to invest cash in cryptocurrencies like bitcoin, although it acknowledges that there is a good opportunity in the digital wallet space.

Rainey told CNBC’s “Mad Money” host Jim Cramer that PayPal had no interest in buying digital currencies, but would rather invest in services that are additive to its platform. Stating that PayPal would only invest in companies that provide “complementary assets to our platform” to drive growth.

“We’re not going to invest corporate cash, probably, in sort of financial assets like that, Rainey said. “But we want to capitalize on this growth opportunity that’s in front of us.”

The payment giant said it believes that the transition to digital currencies is inevitable. PayPal CEO Dan Schulman in December said digital wallets are “natural complement to digital currencies”, adding that PayPal serves 360 million digital wallets.

In October, PayPal announced that it would allow users to buy, hold, and sell digital currencies such as bitcoin, ethereum, litecoin, and bitcoin cash, indicative that the company has appropriate exposure to the digital currency market. Also, users can ship with the cryptocurrencies in the platform’s retail network. The company also announced on Thursday that it would introduce crypto services to the United Kingdom soon enough.

PayPal-owned mobile wallet, Venmo is set to begin offering digital currency services in the first half of the year. The features will also be available to the international market.

“The types of services that we’re providing, like buy now, pay later [and] crypto as an example – even offline QR code – those are the types of things that we want to continue to invest in, be it organically or even inorganically when we see opportunities in the ecosystem, Rainey said.

PayPal’s buy now, pay later offering is a point-of-sale loan program similar to layaway plans which allow shoppers to pay for goods via installment payments with no additional charges.

PayPal CEO Schulman who also featured on the “Mad Money” interview alongside Rainey said in 2020 the company grew free cash flow by 48% to $5 billion. He estimates PayPal will generate $10 billion annual free cash flow by 2025. He also hopes that PayPal will be a consolidator in the fintech industry.

“We want to use that cash. We want to use our balance sheet as a strategic weapon,” Schulman said. “That may be returning cash to shareholders and it may be through acquisition, but every one those dollars matter to us and we really take our capital allocation quite seriously.”

PayPal’s decision not to invest its cash in cryptocurrencies came at a time where big companies like Tesla are taking strategic steps to invest in crypto. Earlier this week, Tesla disclosed that it purchased $1.5 billion worth of bitcoin, and would soon accepting bitcoin as a form of payment from customers. The week also saw a surge in the demand for dogecoin, after it was praised by Tesla CEO Elon Musk on his Twitter page.