Why do I have to confirm my identity to hold money in my PayPal balance?

We only ask you for essential information when you sign up to PayPal, but if you want to hold a balance, we're under a legal obligation to confirm your identity. Even though PayPal isn't a bank, we need to comply with the same government regulations as other financial institutions.

If we're unable to confirm your identity, you’ll only be able to send money and make PayPal purchases using your bank or debit/credit card, not your PayPal balance.