How to Withdraw Bitcoin from PayPal in 2024

In 2024, withdrawing bitcoin from PayPal is easier than ever. As cryptocurrencies continue to gain mainstream adoption, PayPal has emerged as one of the easiest and most convenient places to buy, sell, and hold bitcoin.

While you can’t transfer bitcoin directly out of PayPal like you can with a crypto exchange, there are still several straightforward methods to effectively withdraw your bitcoin funds. This guide will walk through the main options to withdraw bitcoin from PayPal in 2024.

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About of Withdrawing Crypto from PayPal

PayPal currently does not allow users to withdraw cryptocurrencies like bitcoin directly from their PayPal wallets. This means you can’t transfer bitcoin to an external crypto wallet or to another person directly through PayPal.

However, there are a couple easy workarounds that let you convert your PayPal bitcoin balance into “real” bitcoin that can be withdrawn:

Sell bitcoin on PayPal and withdraw the cash proceeds to your bank account. You can then use the cash to re-purchase bitcoin on an exchange and withdraw it to your own wallet.
Use a third-party peer-to-peer platform like Paxful to find someone willing to buy your PayPal bitcoin balance and send you “real” bitcoin in return.

Below we’ll explore these two methods in more detail. But first, let’s look at why PayPal doesn’t allow direct withdrawals and the pros and cons of using PayPal for bitcoin in the first place.

Why You Can’t Withdraw Bitcoin Directly from PayPal

PayPal restricts users from withdrawing cryptocurrency directly from their accounts for a few key reasons:

Regulatory compliance – Direct cryptocurrency withdrawals would subject PayPal to more stringent regulations and licensing requirements related to crypto exchanges and wallets.
Security – By custodying user funds, PayPal can provide stronger consumer protections around fraud and theft. Direct withdrawals could expose users to losing funds if their wallets are compromised.
User experience – PayPal aims to provide a seamless fiat currency payment experience. Enabling crypto withdrawals would add technical complexity around managing private keys.

So in short, PayPal Views bitcoin more as a commodity rather than a currency. This allows users to profit from bitcoin’s volatility, but not utilize it as a payment method.

However, PayPal is constantly evaluating how it can expand services to enable more payment flexibility with cryptocurrency, so direct withdrawals may be supported at some point in the future.

Pros and Cons of Using PayPal for Bitcoin

Given the current inability to withdraw bitcoin from PayPal, is it still worth using as part of your cryptocurrency strategy?

Here are some of the key advantages and disadvantages to consider:

Pros

Easy and fast purchases – Buying and selling bitcoin on PayPal is simple and instant. Much quicker than using a traditional crypto exchange which can take days to set up.
Better consumer protections – PayPal offers robust security and fraud protection measures. And as an FDIC member, cash in your account is insured up to $250,000.
Educational exposure – PayPal provides a secure way for new users to learn about sending, receiving, buying, and selling bitcoin. Could create a gateway to broader crypto adoption for the masses.
Potential to earn interest – PayPal has hinted at plans to allow cryptocurrency balances to earn interest for customers willing to lend out their assets.

Cons

Can’t withdraw bitcoin – The main limitation is the lack of ability to withdraw bitcoin to a private wallet or send it to others. Funds are locked within PayPal’s ecosystem.
Full control over keys – PayPal custodies all cryptocurrency on behalf of users. You do not have full ownership and control like directly owning bitcoin yourself.
Higher spreads and fees – PayPal’s convenience comes at a cost. Spreads and fees for buying and selling bitcoin are generally higher compared to dedicated crypto exchanges.
Tax reporting challenges – PayPal does not currently provide comprehensive tax documentation like many exchanges. This can complicate capital gains reporting.

So PayPal offers a simple way to gain exposure and speculate on bitcoin’s price movements—but lacks flexibility for more advanced crypto uses. With these tradeoffs in mind, let’s look at the two main methods to effectively withdraw bitcoin funds from PayPal.

Selling Bitcoin on PayPal and Withdrawing Cash

The most straightforward approach to withdraw bitcoin from PayPal is to:

Sell your bitcoin back to PayPal to convert your balance to cash
Withdraw the cash proceeds from PayPal to your linked bank account
Use the cash to buy bitcoin on a cryptocurrency exchange
Withdraw the bitcoin to your personal wallet

Here are step-by-step instructions to complete this process:

1. Sell Bitcoin in your PayPal Account

Log into your PayPal account and go to your Crypto Hub.
Select the “Sell” option for your Bitcoin balance.
Choose how much you want to sell and select “Sell Now”.
The bitcoin will instantly be converted back into the cash currency balance of your PayPal account.

2. Withdraw Cash to Your Bank

From the PayPal account overview, select “Withdraw Money”
Choose the bank account you want to withdraw the cash to.
Enter the withdrawal amount in the currency of your bank account.
Complete the two-factor authentication prompt. This usually involves entering a code sent to your phone.
PayPal will process the withdrawal request and deposit the funds into your connected bank account within 1-3 business days.

3. Re-Purchase Bitcoin on an Exchange

Now that you’ve withdrawn the cash, you can use it to repurchase bitcoin on a cryptocurrency exchange platform. Here are some popular options to consider in 2024:

Coinbase – Leading mainstream exchange good for beginners. Easy to link your bank account and has low fees.
Gemini – Another popular exchange with strong security and a variety of trade options. Fully licensed and insured in the US.
Kraken – A top regulated exchange with high liquidity and staking options. Offers a wider selection of crypto assets beyond bitcoin.
Binance – The largest cryptocurrency exchange globally by trading volume. Hundreds of trading pairs but geared more toward experienced users.

Exchanges like Coinbase and Gemini make it simple to link your bank account and fund it with cash to buy into bitcoin or other cryptocurrencies. The purchase is usually instant but can take up to 5 business days for the bitcoin to fully settle in your account.

4. Withdraw Bitcoin to External Wallet

Once you have re-purchased bitcoin on an exchange, you now have full ownership of those funds. You can withdraw to a software, hardware, or web-based bitcoin wallet of your choosing:

Software – Wallets like Exodus allow you to store bitcoin directly on your computer or mobile device. Provides full control of your private keys.
Hardware – Devices like Ledger and Trezor offer offline physical storage for enhanced security. Ideal for large holdings.
Web – Hosted wallets such as Blockchain.com provide browser-based access to your wallet. Convenient but risks entrusting keys to a third party.

Withdrawing bitcoin is as simple as providing your wallet address and the amount to send. Just be sure to triple check that the long alphanumeric address is correct before initiating the transfer. Transactions on major exchanges typically complete within 15-30 minutes but can take longer during times of high congestion on the Bitcoin blockchain.

Using a P2P Exchange to Sell PayPal Bitcoin

Peer-to-peer (P2P) cryptocurrency exchanges allow you to buy and sell bitcoin directly with other users. This provides an easy avenue to convert your PayPal bitcoin balance to “real” withdrawable bitcoin.

Here’s an overview of the peer-to-peer withdrawal process:

Find a seller on the P2P platform willing to purchase your PayPal bitcoin and send you bitcoin in return.
Initiate the transaction by providing your PayPal email address and agreeing on an exchange rate.
The seller purchases your bitcoin balance via PayPal and then sends bitcoin from their wallet to your specified BTC address.
Withdraw the bitcoin received to your external wallet.

There are a few advantages to using a P2P platform over selling your bitcoin back to PayPal directly:

Can often get a better price compared to PayPal’s exchange rates
Much wider selection of withdrawal options like stablecoins, bank transfers, gift cards, etc
Increased privacy since you don’t need to link bank accounts

However, P2P exchanges do come with some increased risks around fraudulent sellers and transfers. Be sure to vet the reputation of the seller thoroughly before initiating any transactions. Some popular P2P platforms that facilitate PayPal bitcoin exchanges include:

Paxful – The largest P2P exchange with over 4 million users. Offers extensive filters to screen reputable traders.
LocalCryptos – A P2P exchange focused on crypto-to-crypto trades. Good privacy protections and a user reputation scoring system.
Bisq – A decentralized open-source P2P exchange network. Emphasizes privacy and security with escrowed trades.
LocalBitcoins – One of the original P2P Bitcoin marketplaces. Over 1 million traders but does have some reported fraud.

Be sure to compare multiple P2P platforms to find competitive exchange rates and traders with consistently excellent feedback scores to minimize your risk.

Tax Implications When Withdrawing Bitcoin from PayPal

It’s important to factor in potential tax obligations when withdrawing your bitcoin from PayPal. In most countries, selling cryptocurrency is considered a taxable event and could incur capital gains taxes.

Here are some key tax considerations when withdrawing bitcoin from PayPal:

You will need to determine the cost basis for the bitcoin being sold, which is usually the original purchase price plus any fees paid.
If selling at a higher price than your cost basis, you will incur either short or long-term capital gains tax depending on how long you held the asset. In the US short-term gains are taxed as ordinary income.
When re-purchasing bitcoin on an exchange after withdrawing cash, your cost basis will be the new purchase price, resetting your holding period.
Be sure to maintain detailed records documenting your cost basis and the dollar value of bitcoin on the date it was sold back to PayPal to calculate your total capital gain or loss.
PayPal does not currently provide Form 1099 tax documents, so you will need to self-report this information on your tax return.
Consider using a portfolio tracking tool or speaking to a cryptocurrency tax professional to ensure you report withdrawals and any other crypto activity accurately.

Properly accounting for taxes whenever you dispose of cryptocurrency is critical to remain compliant and avoid penalties from tax authorities. Be sure to set aside a portion of your proceeds to cover estimated capital gains tax obligations at the time of withdrawal.

Other Potential Withdrawal Options from PayPal

While selling your PayPal bitcoin balance back to cash is the main withdrawal method, there are some other creative options that may work depending on your circumstances. These include:

Finding an individual willing to send you bitcoin in exchange for paying them through PayPal – though there is increased fraud risk going through individuals.
Using your PayPal balance to purchase a gift card, then selling the gift card for bitcoin on a P2P marketplace.
Using the PayPal balance to buy an item you could resell for bitcoin, like an Amazon gift card balance.
Withdrawing to a stablecoin instead of actual BTC to minimize volatility exposure while still keeping funds outside PayPal’s ecosystem.
Waiting to see if PayPal eventually allows transfers to external crypto wallets and exchanges as they continue expanding services.

However, selling back to cash and re-purchasing on a proper exchange is still the simplest and most secure way to withdraw your bitcoin from PayPal. Only get creative if you fully understand the risks.

Frequently Asked Questions

Is there a withdrawal limit or fee from PayPal?

PayPal allows up to $15,000 in account withdrawals per 30-day period. Some withdrawal methods also incur a fee, such as a 1% fee (minimum fee $0.25) for instant electronic withdrawals to debit cards. Withdrawals to linked bank accounts are free but take 1-3 business days.

Can you transfer bitcoin directly from PayPal to Coinbase?

Unfortunately no, there is currently no way to directly transfer bitcoin or any other cryptocurrency from PayPal to an external wallet or exchange. You will need to sell back to cash and re-purchase on the destination exchange.

Is Bitcoin withdrawn from PayPal regulated?

Once the bitcoin is withdrawn from PayPal as cash, re-purchased from a regulated exchange, and sent to your personal wallet, it is as unregulated as any other bitcoin. PayPal itself operates under money transmitter licenses in the states its offered.

Can PayPal close your account if you frequently withdraw bitcoin?

PayPal does have the right to close accounts at its sole discretion. However, periodically withdrawing bitcoin that you legally purchased is generally not grounds for account termination. Just be sure your activity follows their user agreement.

Does selling bitcoin back to PayPal incur a fee?

PayPal does not currently charge any explicit fees for selling your bitcoin balance back to cash within your PayPal account. The fee is built into their spread, which is the difference between the buy and sell price.

Can you withdraw bitcoin from PayPal to another crypto wallet?

Unfortunately PayPal does not allow users to withdraw bitcoin or other cryptocurrency balances directly to external crypto wallets at this time. You will need to complete the workaround of selling it for cash, withdrawing the cash, and re-purchasing bitcoin on a different platform that does allow external withdrawals.

Conclusion

While PayPal still has some limitations on how easily assets can be withdrawn, there are proven methods to effectively withdraw your bitcoin funds. Converting to cash and re-purchasing on a major exchange is generally the simplest approach and allows you full flexibility over your cryptocurrency.

As PayPal continues rapidly expanding its crypto offerings amid rising mainstream adoption, we may see direct withdrawals enabled at some point. But for now, existing workarounds provide an onramp for the millions of PayPal users being introduced to virtual currencies for the first time.

The key is understanding the withdrawal process and potential fees or risks associated with each step. Maintain accurate transaction records and remain tax compliant to avoid any pitfalls when accessing your bitcoin wealth. With the right approach, withdrawing bitcoin from PayPal can be a smooth process to access real decentralized cryptocurrency.