Regulation will keep PayPal's new crypto services from looking anything like crypto

Earlier today, PayPal confirmed that it would be adding crypto payments to its global platform over coming months.

The rollout will begin in the United States, where PayPal also became the first recipient of the New York Department of Financial Services' conditional Bitlicense, a program that the regulator announced this past summer.

While the news is huge for crypto, PayPal will be under intense scrutiny.

Representatives for PayPal declined to comment on what form heightened scrutiny will take, instead directing Cointelegraph to speak with NYDFS. In turn, representatives for NYDFS declined to specify what "Heightened review" might mean for PayPal beyond the vague statutory language already available.

Representatives for Paxos declined to comment on their role in PayPal's conditional Bitlicense.

While nobody is being transparent about the specific hoops that PayPal - which has well over 340 million users worldwide - will have to jump through to satisfy regulators, the firm is clearly going to have to do everything in its power to make crypto behave unlike crypto on its platform, beyond the customer data gathering that PayPal has always done.

PayPal's wallet will be not only custodial, but siloed.

"Currently, you can only hold the Cryptocurrency that you buy on PayPal in your account. Additionally, the Cryptocurrency in your account cannot be transferred to other accounts on or off PayPal."

So what does that mean? Not only are coins held on PayPal most certainly not your coins, but also, this may be the standards that big firms will have to abide by in order to dabble in crypto.

With PayPal what we may be looking at is regulators allowing crypto on major platforms only when it has no chance of going to other platforms, which is more aggressive than a white list.