NEW YORK (InsideBitcoins) – PayPal is attempting to draw the line between digital wallets and digital currency. The company’s inquiry submitted to the Australian Senate in late December, and recently made public, reveals a good deal of PayPal posturing. In order to avoid any fallout regulation, the giant payment processor seeks the governing body to make clear distinctions between the many facets of digital currency technology.
Among requests for clear definitions were recommendations 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.
“It is important to understand that a PayPal account (sometimes referred to as a Digital Wallet) is NOT a digital currency and therefore should not be captured under any definition of what constitutes a digital currency,” PayPal said in the inquiry.
Referencing partnerships with BitPay, Coinbase and GoCoin, the company outlined their decision in September to integrate bitcoin within their subsidiary Braintree and their PayPal Payments Hub. PayPal believes digital goods merchants will be excited to sell their merchandise and get paid in bitcoin, but they want the Australian Senate to understand that they have not 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.”
Blockchain applications should not fall under bitcoin regulation
One of PayPal’s distinctions was that blockchain technology has potential far away from the bitcoin financial payment structure. Applications such as MaidSafe and Storj utilize the blockchain to create solutions for problems companies and Internet users are currently facing.
PayPal believes the blockchain companies that are formulating non-financial solutions should not be subject to the same regulation as the financial businesses of bitcoin and other digital currencies.
“With respect to Bitcoin and other decentralized digital currencies, it is also important to note that the blockchain technology which provides protection against counterfeiting and double spending of the currency also has many potential applications that do not involve payments,” they explained. “The government should clarify that non-payments applications will not be subject to payments regulation.”
Blockchain applications, also known as bitcoin 2.0, utilize blockchain technology to create an entirely new system for data storage, centralized servers, identity ledgers and smart contracts. They do not utilize the blockchain for financial services; rather for advanced and decentralized technological services.
Digital currency exchanges should be regulated
PayPal also wants the Australian Senate to draw a line between digital currencies and the companies that facilitate trades of digital currencies. PayPal believes that bitcoin itself as well as transactions between individual users shouldn’t be regulated, but exchanges should be.
“Those regulations, however, 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.
PayPal prefers a registration and licensing process that is applied to companies providing financial services in digital currency, recommending the Australian Securities and Investments Commission to regulate such transactions in their country. These companies would also be subject to the Anti-Money Laundering and Counter Terrorist Financing Act.
Furthermore, PayPal also wishes for Australia to institute a “technology neutral” regulatory process to ensure innovation is not stifled.
“Digital currencies are changing the global payments landscape and will play an important role in the future, particularly in global trade and the broader global economy and ecommerce environment,” PayPal said. “While digital currencies are yet to become mainstream, for companies such as PayPal which embrace innovation and efficiency in the global digital economy we will continue to monitor developments in this ever-evolving arena.”