In a blog post published on August 23, head of investment analysis at AJ Bell, Laith Khalaf, weighed in on the latest development that payment provider PayPal (NASDAQ: PYPL) has announced that it would soon offer a cryptocurrency service in the United Kingdom.
Investing in digital currencies has become increasingly popular in recent years, and this latest development will allow consumers another way to do it. Cryptocurrencies are renowned for their volatility, and PayPal has already provided information about the risks involved with trading crypto.
Afraid of the potential problems that customers may encounter despite PayPal’s cautions, Mr. Khalaf is apprehensive. He said:
“PayPal has doffed its cap to regulatory concerns, highlighting the educational content it will host alongside its crypto service, including the risks <..> That’s to be welcomed, though there are already concerning signs of reckless behavior by consumers.”
UK investors taking risks
When it comes to investing in crypto, many UK investors are skipping traditional ways of saving and jumping in headfirst. Six out of 10 crypto investors do not have an ISA, and half do not have a pension, Mr. Khalaf noted, according to an AJ Bell poll. As a result, Khalaf is skeptical about the validity of crypto transactions between customers and sellers.
Substantiating his argument is the fact it was revealed that 14% of UK crypto purchasers used loans to fund their purchases, according to FCA data released in June.
“While many are no doubt using crypto as a bit of harmless fun with small amounts of money they can afford to lose, some consumers are at risk of getting sucked in and spat out by the crypto craze.”
Overall, Mr. Khalaf feels that the launch of the new PayPal service has both its pros and cons. Also, the fact that PayPal is a well-known, publicly-traded corporation already subject to regulatory scrutiny makes its position on the crypto market a good one.