PayPal's crypto assets grew by 56% in Q1 2023 to around $1B.
PayPal's major holdings of cryptocurrency are in BTC and ETH, with $499 million and $362 million, respectively, which have both increased by over 56% since Q4 2022.
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PayPal has revealed its cryptocurrency holdings in a quarterly report submitted to the United States Securities and Exchange Commission.
According to the filing, as of March 31, 2023, PayPal's total cryptocurrency assets amounted to $943 million, which is a 56% increase from the previous quarter's disclosed amount of $604 million.
PayPal's total financial liabilities for the current quarter were reported at $1.2 billion, with cryptocurrency assets constituting 77.9% of this amount, which is more than a 10% increase from the reported fourth-quarter liabilities in 2022.
The report reveals that PayPal views its cryptocurrency assets as a "safeguarding liability" due to the unique risks associated with these digital assets. The disclosure also states that PayPal has not made any changes to the specific cryptocurrencies it holds since the previous quarter.
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’).
PayPal's custody of the cryptocurrency assets held on behalf of its customers is currently limited to third-party holding companies. The company acknowledges that this arrangement may create a liability for its customers if the third parties are unable to process transactions. This statement is consistent with the previous quarter's filing. However, the current filing indicates that no such issue has occurred so far.
The filing states that as of March 31, 2023, there have been no safeguarding loss events for PayPal, and as a result, the cryptocurrency asset safeguarding liability and the corresponding safeguarding asset have been recorded at the same value.
The Q1 2023 cryptocurrency asset breakdown for PayPal includes $499 million in Bitcoin $27,568 (up from December’s $291 million), $362 million in Ether 1,839 (up from $250 million), and $82 million composed of Bitcoin Cash $119 and Litecoin $78.97 (up from $63 million).
In addition to the increase in cryptocurrency assets, PayPal also reported increased profitability in the first quarter. The company disclosed a per-share earnings of $0.70 on a GAAP basis, 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.
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