PayPal is hopping on the Bitcoin bandwagon with an announcement yesterday that it would allow customers to buy, sell, and hold bitcoin and other cryptocurrencies using its online financial services. The move will allow the company to support cryptocurrency payments to the 26 million vendors in its network.
PayPal isn’t the first financial services provider to support cryptocurrencies. Blockchain technology is also used by major financial service providers. And even when it comes to cryptocurrency, major banks from Ally to USAA allow the purchasing and transfer of bitcoin. The difference in PayPal’s deep dive into cryptocurrency is the scope. With more than 286 million users and millions of vendors, as well as the online nature of the platform, the company is making the way for cryptocurrency payments to go mainstream.
Bitcoin Still a Policy Gray Area
Like CBD products, bitcoin remains a policy gray area for security clearance holders. A 2018 email originating in the Defense Security Service advised that bitcoin should be reported as foreign currency. Updated guidance said the Department of Defense and Director of National Intelligence were working to develop guidance on bitcoin, but as of this writing no policies have been published. The IRS has said bitcoin should be considered property – but the currency by definition exists outside of legal instruments and institutions – a major part of the draw, and a key issue for security clearance holders.
Bitcoin has two key markets today – individuals looking to make dark web purchases or hide their investments from legal frameworks, and those who see it as an emerging financial opportunity or investment. Both issues pose concerns for security clearance holders or applicants.
“I am concerned that PayPal’s move to allow cryptocurrency on their platform gives a veneer of stability to what is fundamentally still a very risky investment,” said Sean Bigley, security clearance attorney and partner at Bigley Ranish. “Cryptocurrency is the digital equivalent of junk bonds; an investor can make a lot of money, but he or she can also lose everything in the blink of an eye. Clearance holders looking to ‘cash in’ on a big windfall should be mindful of the risks and proceed as though they were gambling – by not investing more than they can comfortably lose.”
Bitcoin: Play Wisely
With financial issues consistently the number one cause of clearance denial, the advice to keep any cryptocurrency investments reasonable is a good one. The other factor is that while bitcoin reporting requirements today are unclear, it’s not beyond the scope of the government to ask about any cryptocurrency investments. While PayPal increases the legitimacy, it doesn’t decrease the risk. Obtaining financial gain from an unknown source is not a good idea. Whether your investments are bitcoin, cryptocurrency or traditional stocks, make sure you understand where your money is coming from and where it’s going – and don’t get in over your head.