Bitcoin exchanges play a very important role in the current bitcoin economy. They create a much needed bridge between bitcoin economy and conventional economy. They allow bitcoin holders to convert the digital currency to local fiat currency (supported currency) and vice versa. Until now, most of the bitcoin exchanges have been using wire transfer as the mode of inward and outward transfer of fiat currency. Few exchanges do have an option to buy bitcoin using credit/debit cards, but the funds from selling bitcoin on the platform is still processed through wire transfer.
However, Coinizy is now breaking the habit by introducing another mode of redemption by using PayPal. According to the latest announcement of Coinizy, users can now get the funds from selling bitcoin transferred directly to their PayPal account instead of connected bank account.
According to Coinizy, it is the first bitcoin exchange in the world to introduce one-way bitcoin to PayPal redemption service. However, the company will be routing the money through a Hong Kong based financial intermediary to the users’ respective PayPal accounts. Silicon Angle reports that Coinizy has failed to provide the name of the Hong Kong based foreign intermediary. It also reports that Coinizy has been issued a MSB License by Canadian Financial Regulator – FinTrac.
Apart from PayPal, Coinizy’s customers can also avail other conventional bitcoin to fiat redemption service like wire transfer, Western Union and even prepaid debit cards for the respective value. If Coinizy manages to offer the promised service flawlessly, then there will be many takers in the bitcoin community who would be more than willing to use bitcoin to PayPal redemption service over other conventional services.
At the moment, PayPal doesn’t seem to have any concerns about this model due to the involvement of an intermediary, or at least nothing is made public so far. However, how PayPal will react to it, once the service gets bigger is another question one should consider. Also, how many people are really ready to allow another third party company based out of Hong Kong handle their money is another question that will be answered in due time.