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Venmo launched a credit card feature on Tuesday that allows users to convert their cash back rewards into bitcoin and other cryptocurrencies.
The development is part of the larger crypto strategy of PayPal, parent of Venmo. The company launched a dedicated cryptocurrency trading division earlier this year after introducing crypto trading to its clients last fall. This latest step gives him the opportunity to usher in a wave of new cryptocurrency holders.
The new Venmo feature isn’t quite encrypted, but it’s a step away. There are a number of credit cards that are gearing up to enter the market, such as those from BlockFi and Gemini, which will offer cryptocurrency spending rewards, in the hopes of putting crypto in the hands of people without force them to invest in it.
Instead, Venmo allows cardholders to set an automatic purchase for the cryptocurrency of their choice to be made as soon as they receive their cash back when making a purchase with the card. This conversion has no transaction fees for customers, and they will get the price of the cryptocurrency at the time of conversion.
Bitcoin, ether, litecoin, and bitcoin cash are available to all 76 million Venmo users. Customers cannot yet move the platform’s digital assets, so any rewards converted to crypto will remain in their Venmo app unless they choose to sell them.
Robinhood, which has around 18 million active users, offers free crypto transactions. Coinbase, which is expected to release its results Tuesday night, has some of the highest fees, at least for retail traders. Coinbase has around 56 million users.
User growth and fee compression are the key metrics analysts want to see of Coinbase’s earnings. For any cryptocurrency exchange business, earnings expectations are tempered as much of the second quarter has been a bear market for crypto, and cryptocurrencies tend to be long-term trades. However, analysts told CNBC they viewed user growth as a measure of “critical health” for crypto exchanges.
For regular purchases and sales, Venmo and PayPal maintain their tiered fee structure starting at 50 cents for transactions under $ 25. From $ 25 to $ 100, he charges 2.3%. It estimates a 2% fee for transactions between $ 100 and $ 200; 1.8% for transactions between $ 200 and $ 1,000; and 1.5% for any amount over $ 1,000.
Venmo’s cashback to crypto conversion program comes in a week in which digital currency is gaining even more attention in Washington.
The virtual currency industry took a heavy blow in Congress on Monday when the Crypto Compromise Amendment – which would have limited a proposal to increase federal cryptocurrency regulation – was prevented from being added to the bill on the ‘infrastructure. Yet the debate over the nuances of cryptocurrency protocols has legitimized the industry and trained lawmakers – a development many see as a long-term benefit for crypto.
“Washington now views crypto as a real commodity that deserves government attention,” Cowen’s Jaret Seiberg said in a note Tuesday. “For us, this is symbolically important because it tells us that Washington is done looking for ways to end crypto.”
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