What happened

Shares of PayPal (NASDAQ:PYPL) have popped today, gaining 5% as of 12:30 p.m. EDT, after the company unveiled a new service that will allow users to trade cryptocurrencies. Bitcoin prices also jumped to the highest levels in over a year on the news.

So what

PayPal said that it plans to boost the utility of cryptocurrencies by adding them as a funding source for users making purchases at merchants. The company wants to help catalyze mainstream adoption of cryptocurrencies, which PayPal notes has been limited by volatility, costs, and transaction speeds. The specific currencies that will be supported initially will be bitcoin, Ethereum, bitcoin Cash, and Litecoin.

Person using the PayPal app to trade bitcoin

Image source: PayPal.

"The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly," CEO Dan Schulman said in a statement. "Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange."

Now what

Using cryptocurrencies as a funding source for transactions will become available in early 2021, and PayPal also plans to extend the support to Venmo -- the popular peer-to-peer (P2P) payment service that it acquired nearly a decade ago -- in the first half of 2021. PayPal will provide educational content for users to help them better understand the unique risks of investing in cryptocurrencies.