- Coinbase users in Canada can now fund their crypto trading accounts straight from their PayPal accounts.
- Meanwhile, the platforms have found a way to circumvent the restrictions of the GENIUS Law in the US, allowing them to continue rewarding their stablecoin users.
Industry heavyweights Coinbase and PayPal have announced the expansion of their partnership from the US to Canada. The move allows the parties to expand their services for North American customers.
The platforms have also utilized a legal loophole in the newly passed GENIUS Law that would allow them to continue offering rewards to their respective stablecoin users.
The Canadian Expansion of the Coinbase and PayPal Collaboration
Following the announcement of their partnership in the US last year, Coinbase and PayPal have rolled out the same services that will allow Canadian users of their platforms to buy and sell cryptocurrency seamlessly. With it, users can select PayPal to fund their trades on Coinbase, giving them greater flexibility in linking their bank, card, or PayPal wallets with the exchange.
Coinbase said that it recognizes the strong preference and familiarity of Canadians with PayPal. To date, the e-commerce platform services over 10 million users in Canada. Hence, the crypto platform has decided to expand the same feature that American users have been enjoying since last year further north. At the same time, it wants to reward its customers with more convenience in topping up their trading accounts.
“With nearly 10 million active PayPal accounts across the country, Canadians have long trusted PayPal for their financial needs–whether it’s shopping, running their business, sending money, or managing their funds online,” the leading crypto exchange wrote in a blog post that revealed the partnership expansion. “We’re now adding another layer of convenience for Canadian crypto holders by integrating PayPal with Coinbase, allowing users to buy and sell using PayPal.”
Meanwhile, John Froese, Senior Vice President at PayPal, echoed Coinbase’s sentiment.
“At PayPal, we’re driving the future of digital commerce for Canadians—combining trusted money management with cutting-edge commerce tools,” the PayPal exec noted. “Our partnership with Coinbase makes accessing and funding crypto accounts effortless, opening new doors to the digital economy for more people.”
Bypassing the GENIUS Act’s Restrictions in the US
Along the way, Coinbase and PayPal have capitalized on a loophole within the GENIUS Act that will let them continue offering rewards to the stablecoins they are hosting. This is despite the provisions of the law that restrict yield-bearing stablecoins.
In the latest second quarter earnings call of Coinbase, CEO Brian Armstrong clarified that the trading platform is not the issuer of the USDC stablecoin it’s hosting. The issuer of the asset is Circle.
Additionally, it doesn’t pay any interest to the bearers of the stablecoin. Instead, it gives them rewards. For these reasons, the GENIUS Act restriction does not apply to the rewards it rolls out for USDC users.
PayPal also uses the same arguments to justify the rewards program under the PayPal USD (PYUSD) stablecoin. Furthermore, despite carrying its name, PayPal is not the issuer of the PYUSD. The stablecoin’s issuer is Paxos.
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