The biggest crypto news event of the last day is the report from Bloomberg that PayPal is looking into acquiring BitGo, one of the industry’s leading digital asset custodians.
The news first broke in China, then eventually spread to the Western world through Bloomberg. The outlet reported that “people familiar with the matter” indicate that PayPal is looking to acquire a “number of” crypto firms, namely BitGo. No details were disclosed about the discussions or the exact price BitGo is looking for.
While no details were confirmed and PayPal did not comment on the story, many have begun to speculate what such an acquisition would mean for the industry. Naturally, some have wondered what effect it will have on DeFi.
Thorchain could benefit from BitGo acquisition by PayPal
Early this week, PayPal revealed that it would be supporting crypto assets by enabling purchases and sales of leading digital assets like Bitcoin and supporting cryptocurrency payments between vendors and customers.
This was followed up with the Bloomberg report, which indicated that PayPal is serious about crypto assets.
While many see the potential BitGo deal as fundamentally bullish as it would mark a large capital investment in the space, THORCHain, a cross-chain decentralized liquidity network, says that it may backfire:
“There goes wBTC. The majority of wrapped Bitcoin is custodied by BitGo. PayPal is not a good actor in this space. Position accordingly.”
There goes wBTC.
The majority of wrapped Bitcoin is custodied by BitGo.
PayPal is not a good actor in this space. Position accordingly. https://t.co/bETSfDr88J
— THORChain ⚡️(ᚱ) (@thorchain_org) October 22, 2020
BitGo holds a majority of the Bitcoin that backs the Wrapped Bitcoin (WBTC) tokens on the Ethereum network.
THORChain‘s comment is an insinuation that PayPal may seek to use BitGo’s influence over WBTC in some way.
Google Payments employee Tyler Reynolds, who moonlights as a crypto analyst on Twitter, made a direct comment that this acquisition should help THORChain itself and its native token RUNE.
THORChain is a network that allows users to swap between assets across chains in a non-custodial manner, which may eliminate some of the need for wrapped tokens.
The start of a great institutional entrance
Whatever comes of this deal, many see the PayPal news as the start of a great institutional entrance into Bitcoin and crypto.
Michael Novogratz, CEO of Galaxy Digital and a former Goldman Sachs partner, commented that with PayPal putting serious capital into this space, other Wall Street firms and banks are going to start to look into digital assets. He specifically highlighted how against bank stocks, PayPal and crypto have strongly outperformed them.
“We are going to see over the next 10 yrs a rebuilding of the financial infrastructure of this country,” says @Novogratz. “It was the COVID virus that really accelerated adoption of crypto–the macro story with #btc, and more maybe important story of digitalization of all cash.” pic.twitter.com/ofSFvH6IZy
— Squawk Box (@SquawkCNBC) October 23, 2020