During the first week of 2023, payment service giant Paypal said it was exploring the launch of a stablecoin. At the time, an executive at Paypal stated that if the company moved forward, it would work closely with financial regulators. However, on Feb. 10, a source noted that Paypal has put the concept on hold for now amid the regulatory scrutiny of the crypto industry.
Paypal Pauses Stablecoin Development as Regulatory Concerns Loom
On Jan. 7, 2023, it was reported that Paypal was exploring the creation of a stablecoin.“We are exploring a stablecoin,” a Paypal executive told reporters at the time. “If and when we seek to move forward, we will, of course, work closely with relevant regulators.” The multinational financial technology company, founded in Dec. 1998, is one of the largest online payment systems in the world.
However, Paypal appears to have slowed its plans to develop a stablecoin, according to a Bloomberg report citing a person with knowledge of the matter. Paypal was also working with Paxos, the stablecoin issuer that is reportedly under investigation by the New York State Department of Financial Services (NYDFS). Nikhilesh De of Coindesk learned about the alleged investigation, but was told by an NYDFS spokesperson that the agency could not comment on ongoing investigations.
Paxos manages two stablecoin projects, a tokenized gold coin, and holds a Bitlicense issued by the NYDFS. There has been a significant crackdown on cryptocurrency businesses following the collapse of FTX. Recently, crypto lender Nexo agreed to settle with the U.S. Securities and Exchange Commission (SEC) and several state regulators over its earn product. Nexo paid the regulators $45 million on a “no admit, no deny” basis and ended the program in the United States.
More recently, Kraken was fined $30 million for its staking service program and was forced to stop offering the service to U.S. retail customers. Kraken clarified that it will continue its staking services for customers outside the United States. Founder Jesse Powell is calling on Congress to issue clear regulatory guidance and protect retail investors from using offshore services.
Bloomberg’s Yueqi Yang and Jennifer Surane did not reveal the specific reason for Paypal’s decision to pause its stablecoin plans. The payments giant recently entered the cryptocurrency industry by launching a wide range of crypto services in 2021. Paypal holds an NYDFS-issued Bitlicense and converted its conditional Bitlicense to a full license in June 2022.
What do you think about Paypal’s decision to pause their stablecoin plans? Share your thoughts in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: JHVEPhoto / Shutterstock.com
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Read disclaimer