PayPal has agreed to buy Tel Aviv-headquartered digital asset security startup Curv, as it seeks to add depth and improved resilience to its portfolio of digital currency capabilities.
The planned acquisition — terms were not disclosed — comes after PayPal in October 2020 started allowing account holders in the US to buy, hold and sell cryptocurrency directly with PayPal.
That move “signaled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26 million merchants worldwide”, PayPal said at the time.
Curv, which has some 40 employees, provides a decentralised security model that eliminates the need for private keys used to sign blockchain applications, replacing them with what it describes as “multi-party computation (MPC) protocols” that enable transactions to be securely signed in a distributed way to eliminate any single point of failure. It claims to be the first such provider that offers enterprise-ready audit logs and permissions controls over digital wallets that support Bitcoin (BTC), Ethereum (ETH), and all ERC-20 tokens, out-of-the-box.
Internet-facing “hot” digital currency wallets that are “multisig” — i.e. offer the equivalent of MFA with the requirement for additional private keys for transactions — are typically protocol-specific, for example offering support for Bitcoin, but not Ethereum, Curv says.
“For those protocols that don’t support multisig (e.g Ethereum), providers can implement a software-based smart contract that enables several signatures, but these contracts have been prone to bugs and exploits and were not intended to be a security layer, as their code is open and attackable by all… the additional complexity and cost introduced by the combination of multisig wallets and smart contracts likely overshadows any incremental security benefits they might deliver.”
(“Cold” wallets, by contrast, with their associated access controls and insider risks, are also inadequate, Curv holds.)
“The acquisition of Curv is part of our effort to invest in the talent and technology to realize our vision for a more inclusive financial system,” said Jose Fernandez da Ponte, VP and general manager, blockchain, crypto and digital currencies, at PayPal, in a press release.
“During our conversations with Curv’s team, we’ve been impressed by their technical talent, entrepreneurial spirit, and the thinking behind the technology they’ve built in the last few years.”
Curv was founded in 2018 by CEO Itay Malinger and CTO Dan Yadlin. Malinger said: “As the adoption of digital assets accelerates, we feel there’s no better home than PayPal to continue our journey of innovation. We’re excited to join PayPal in expanding the role these assets play in the global economy.” The deal should close H1 2021.
The acquisition comes as from the cloud to traditional stock exchanges, focus is growing on how to deliver digital currency or distributed ledger technology-enabled applications. Last week, for example, AWS added Ethereum to its Amazon Managed Blockchain, while Swiss stock exchange SIX is understood to be just weeks away from regulatory approval for a new digital exchange underpinned by R3’s Corda technology.