Currently, PayPal only issues 1099-Ks to users if their account proceeds reach $20,000 (of gross payment volume) and includes more than 200 transactions in any year. That is the only reporting PayPal currently does to the IRS. However, as any sales transaction on crypto within PayPal accounts is a taxable event and must be reported.
As for using cryptocurrencies like bitcoin inside of PayPal to buy something, that too is a taxable event (because PayPal first converts crypto into fiat currency, which is itself a taxable event). PayPal’s stance is best summed up with its initial statement:
“It is your responsibility to determine what taxes, if any, apply to transactions you make using your Cryptocurrencies Hub. You can access your transaction history and account statements through your PayPal account for purposes of determining any required tax filings or payments.”
Note you shouldn’t solely rely on this transaction history to prepare your tax return. Each transaction is its own taxable event, even if you use bitcoin to buy a cup of coffee.
To stay out of trouble with the IRS (which can request user account information from PayPal), keep your own thorough records of each purchase, transfer, exchange, and sale of crypto you make.