I work at a Canadian bank and have had branches ask this exact question so I decided to investigate myself. I contacted Paypal directly and spoke to one of their agents. As it stands right now, if someone sets up an account on Paypal that is a Canadian bank account- although the specific account type is in USD funds, it will not work. When the paypal user receives funds in USD, this will be converted to Canadian funds before being deposited. The only Financial Institution that has it set up where their Canadian clients can have the funds remain in USD currency when being deposited is RBC. Paypal advised the Canadian Financial Institution would have to set this up so their customers can have this option, but I'm not sure how true that is. Hopefully Paypal at some point will have a system fix for this.
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