PayPal-powered Venmo service allows users to buy, sell and hold Bitcoin and other cryptocurrencies within the Venmo app, the company announced today. “Customers have the option to buy and sell cryptocurrency with funds from their balance at Venmo or a linked bank account or debit card,” the announcement said.
Users can buy or sell bitcoin, ether, litecoin, and bitcoin cash. The feature is being rolled out today for some users and will be “available to all customers directly in the Venmo app over the next few weeks”.
As soon as it becomes available, users can get started “by clicking” Crypto “in the Venmo menu in the top right corner of the app,” the announcement says. Crypto purchases can be made for as little as $ 1, but there is a minimum fee of 50 ¢ for each purchase. Each user is limited to cryptocurrency purchases of $ 20,000 per week and $ 50,000 in any 12 month period.
The Venmo announcement said nothing about paying for goods or services with cryptocurrency, but that ability could come to Venmo later. As CoinDesk wrote today, “PayPal opened trading in selected cryptocurrencies for US customers last November and began allowing users to pay with crypto in March.” According to PayPal, the service automatically converts when users pay with PayPal using cryptocurrency[s] in USD or another currency at no additional charge. “
No peer-to-peer crypto transactions
For now, at least, Venmo doesn’t support peer-to-peer crypto trades or the ability to transfer cryptocurrency from one account to another. “Venmo only supports buying and selling cryptocurrency through your Venmo account,” reads a Venmo FAQ. “In order to complete P2P transactions with Venmo, all crypto assets held at Venmo must be sold and thus converted into USD.”
The ability to store cryptocurrency in a Venmo account only applies to cryptocurrency purchased from Venmo. This means that you cannot transfer bitcoins or other cryptocurrency from other sources into Venmo.
The PayPal and Venmo cryptosystems use the Paxos crypto brokerage service. “PayPal has also been granted a unique BitLicense from the New York Department of the Treasury (NYDFS) that allows PayPal and Venmo to provide their customers with the ability to buy, sell and hold cryptocurrency,” PayPal said.
Like PayPal, Venmo allows buying and selling of cryptocurrencies in most of the United States, but not in Hawaii, where the market has some regulatory restrictions. Venmo notes that “the buying, selling, and holding of cryptocurrencies are unregulated in many states, including the state of California.”
Crypto traders need to verify their identity
Venmo does not support cryptocurrency transactions for business profiles, which limits the ability for individual users. While anonymity is often seen as the main benefit of using cryptocurrency, Venmo notes that the crypto service is only available to US customers “who have verified their identity with Venmo”.
Venmo also pointed out that cryptocurrency trading “can result in significant losses”.
“Venmo does not cover losses due to fluctuations in the price of cryptocurrencies. We recommend that customers ensure that the purchase of crypto is suitable for their individual financial situation,” stated the frequently asked questions about Venmo. “Since crypto purchases and sales are irreversible, Venmo urges customers to do their research and make careful decisions.” Venmo promises that “cryptocurrency purchases are protected in the event that unauthorized activity takes place”.
According to Venmo, fees for crypto transactions are generally between 1.5 and 2.3 percent. The fees are 1.5 percent for purchases or sales over $ 1,000. 1.8 percent for transactions between $ 200.01 and $ 1,000; 2.0 percent for transactions between $ 100.01 and $ 200; and 2.3 percent for transactions between $ 25 and $ 100. There is a minimum fee of 50 ¢ for transactions between $ 1 and $ 24.99.