Amid ongoing discussions of bitcoin regulation, PayPal has called for a clear definition to be made between digital wallets and digital currency.
The company’ submitted an inquiry to the Australian Senate in late December, which has only recently been made public. In it, PayPal recommended that PayPal’s digital wallets be held separate from digital currencies and that blockchain-based applications don’t fall under the same regulation as bitcoin, Inside Bitcoins reported.
PayPal made the decision in September to integrate bitcoin within their subsidiary Braintree and their PayPal Payments Hub through partnerships with BitPay, Coinbase and GoCoin. However, the company was keen to point out that this does not mean that PayPal have directly integrated bitcoin into their digital wallet platform.
“It must be emphasised to the Senate Inquiry that PayPal’s announcement does not mean that PayPal has added Bitcoin as a currency in our digital wallet in the US or that Bitcoin payments will be processed on the PayPal payments platform,” they said. “At this stage, consumers will not be able to store Bitcoins in their PayPal digital wallets.”
The company also recommended that the Australian Senate draw a line between digital currencies and the companies that facilitate trades of digital currencies. PayPal believes that while bitcoin exchanges should be regulated, transactions between individuals, and bitcoin itself, should not.
The regulations for bitcoin exchanges “should be adapted to recognise the specific details of how different digital currencies work, particularly ‘decentralised’ digital currencies that are not controlled by a specific issuer,” the company said.
The company went on to say that blockchain technology has potential outside of bitcoin usage, adding that those companies that are using the technology for non-financial solutions should not be subject to the same regulation as companies trading in bitcoin.
Ultimately, PayPal recommended a registration and licensing process that is applied to companies providing financial services in digital currency only, recommending that the Australian Securities and Investments Commission regulate such transactions in their country. These companies would also be subject to the Anti-Money Laundering and Counter Terrorist Financing Act.
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