Crypto Weekly: Acquisition and remarkable exposure

PayPal acquires European custodian Curv

PayPal launched brokerage of cryptocurrencies in October 2020. From being solely retail-focused on its cryptocurrency offering, there is strong evidence that PayPal is doubling down on crypto, and slowly expanding its offering to institutional investors. Yesterday, the company announced they have acquired the European cryptocurrency custodian Curv for reportedly close to $200mn. The acquisition most likely marks a shift towards a custody offering for institutional investors. If that is the case, PayPal will be joining banks like JPMorgan, BNY Mellon, Deutsche Bank, and Goldman Sachs, which also have a custody offering in their pipeline. Additionally, the acquisition signals that PayPal wants to store the cryptocurrency held by its retail clients in its own custody solution, which could lift profit margins for its cryptocurrency business. Currently, the funds are allegedly stored by the US-based broker Paxos, who is also facilitating the brokerage for PayPal.

40% of Goldman Sachs clients have crypto exposure

Goldman Sachs released a cryptocurrency client survey last week consisting of interesting takeaways. Most interesting, the survey concluded that 40% of the respondents have exposure to cryptocurrencies. Out of this part, 41% hold cryptocurrencies physically. The rest is most likely holding futures or other financial instruments. 61% of the total respondents expect to increase their cryptocurrency holdings in the next 12-24 months. 24% believe lack of well-regulated, investible assets is the biggest hurdle in the crypto industry. The survey was conducted on only 280 respondents making it a small survey and the representativeness quite questionable. However, the respondents were a broad mix of hedge funds, pension funds, insurance companies, and asset managers.

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