Despite the retraction, the crypto community said the policy is a perfect example of why decentralization and self-custody of funds are so important.
Online payment network PayPal has reneged on a controversial policy that could’ve seen users fined $2,500 for spreading “misinformation,” with the payment platform claiming the policy update was published “in error.”
The now retracted misinformation clause in PayPal’s Acceptable Use Policy (AUP) was set to take effect on Nov. 3, which would have expanded on its list of prohibited activities to include “the sending, posting, or publication of any messages, content, or materials” that "promotes misinformation."
But the screenshot of the policy says otherwise. PayPal caves after social media backlash. Read the full story below!https://t.co/5KX1d6O3RP pic.twitter.com/aWEdw86Xvd
— thetechstartups (@thetechstartups) October 9, 2022
PayPal has since told multiple outlets reporting on the clause that the updated AUP went out in error and included incorrect information, clarifying that it would not fine its users for spreading misinformation:
“PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy [...] Our teams are working to correct our policy pages. We’re sorry for the confusion this has caused."
The controversy has spread like wildfire on Twitter among both crypto and non-crypto observers, with some continuing to comment on the issue even after the retraction.
Lightspark CEO and former PayPal president David Marcus, called it “insanity” that "a private company now gets to decide to take your money if you say something they disagree with.”
Tesla CEO and former PayPal co-founder Elon Musk responded to Marcus’ tweet with “Agreed.”
Maple Finance co-founder Sid Powell said the case at hand provides a textbook example as to why it is essential to have custody over your own funds.
PayPal is a good example of why you need to custody your own funds. Your finances used to be decoupled from free speech. Now custodying your own funds is the only way to safeguard that right for yourself
— Sid Powell ( ) (@syrupsid) October 9, 2022
Founder and CEO of crypto consulting and education platform Eight Michaël van de Poppe kept his opinion short and sweet, calling it “The end of PayPal.”
The end of PayPal.
— Michaël van de Poppe (@CryptoMichNL) October 9, 2022
Buy #Bitcoin.
Related: Business owners should get off PayPal and move to the blockchain
But not everyone considered PayPal’s now retracted clause to be dishonorable to its users.
Chief Strategy Officer Meltem Demirors of digital asset investment firm CoinShares said that in any event, companies have the right to choose who can use its services without explanation:
2/ whether explicitly stated via their Terms of Service or not, all sorts of companies from @github to @PayPal to (insert service provider here) engage in censorship and have the right to deny service and access to anyone they choose, at any time, without explanation
— Meltem Demirors (@Melt_Dem) October 9, 2022
“And if you think crypto is immune you're either naive or willfully ignorant,” she said, adding:
“Currently, 31% of post-merge Ethereum blocks are OFAC-compliant, meaning they censor transactions associated with specific contracts and addresses on a state-sponsored list.”
While the implementation of a fine would’ve been a first for PayPal, the payment giant is no stranger to deplatforming users it isn’t politically aligned with, having cut ties with domain registrar Epik in Oct. 2020 who provided services to the Proud Boys and other conservative groups.
Similarly to the broader stock market, PayPal (PYPL) has plummeted 64.65% over the last 12 months according to Yahoo Finance.
The NASDAQ is due to re-open on Sept. 10 at 9:30 am Eastern Time, so it remains to be seen whether the clause and its subsequent retraction will impact PayPal’s share price.
