Is Paypal one of those platforms that has been giving interest to users for holding crypto on their own site? Hopefully not, as they should know better as to what has been happening to those kinds of services over the last few months.
No, but...
If you look at Paxos' Terms and Conditions, you'll find the following:
Notwithstanding anything in the Paxos Contractual Documentation to the contrary, you agree and understand that (i) we may hold some or all of your fiat currency deposits (including with respect to reserves backing US dollar stablecoins) in a manner which generates interest and/or other earnings and, in such case, you agree to pay us a fee equal to the amount of any such interest and/or earnings attributable or allocable to your fiat currency deposits as payment for the custody services we provide to you under the Paxos Contractual Documentation.
So in other words, any fiat you hand over will be invested or loaned out in order to generate interest or earnings, and Paxos will keep 100% of the profits for themselves. And if they are doing it for fiat, it wouldn't surprise me in the slightest if they were doing the same for crypto, too. This is exactly the kind of irresponsible behavior which resulted in the collapse of dozens of other exchanges in the past few months. 100% of the profits to the exchange, 100% of the risks to the user.
Unless Paypal plans to put some of their stock or earnings on the line, I cannot see this happening at all (besides it would only be available on like Coinbase considering Paypal won't let just any exchange list it).
Nah, it's super simple. You deposit money to your PayPal account, PayPal deem that as sufficient collateral to print an equal number of their new unstablecoin, and then they can use that unstablecoin to buy bitcoin for themselves, pay interest to entice more deposits, the usual shenanigans.
