PayPalโs crypto holdings rose 56% in Q1 2023 per a recent submission to the U.S. Securities and Exchange Commission (SEC).
In Q1 2023, PayPalโs cryptocurrency assets comprised $499m in bitcoin (BTC), up from $291m in December; $362m in ethereum (ETH), an increase from $250m; and an aggregate of $82m in bitcoin cash (BCH) and litecoin (LTC), which rose from $63m.
PayPalโs crypto assets rose to $943m by March 31, 2023, a 56% jump versus the $604m registered in Q4 2022.
The firmโs profitability also increased during this period.
On a generally accepted accounting principles (GAAP) basis, the company reported earnings per share of $0.70, a jump from $0.43 in Q1 2022.
While not complying with GAAP, PayPalโs earnings per share stood at $1.17, up from $0.88 during the same period in 2022.
At the same time, the payment processor declared total financial obligations of $1.2b in the first quarter of 2023.
Of the total obligations, 77.9% are accounted for by cryptocurrency assets. It represents an over 10% rise since Q4 2022.
PayPalโs crypto holdings are marked as โprotective liabilityโ, pointing to the inherent risks associated with digital currencies.
Overall, specific coins held remained consistent in Q1 2023.
PayPal reported:
โWe offer our customers in select markets the ability to acquire, hold, exchange, send, and receive specific cryptocurrencies and to use the proceeds from crypto sales to cover purchases at checkout. These digital currencies includeย bitcoin, ethereum, bitcoinย cash, and litecoin (collectively referred to as โour clientsโ crypto assetsโ).โ
PayPal uses third-parties to custody clientsโ assets.
However, the publicly traded firm acknowledged potential risk for users if these entities fail to process transactions. It is a concern that was also expressed in Q4 2022โs filing.
Even so, PayPal acknowledged that no incident or withdrawal problem has been reported to date:
โUp to March 31, 2023, the Company has not faced any safeguarding loss incidents, which is why the crypto asset protective liability and the corresponding protective asset were documented with identical values.โ
