During the first week of 2023, payment service giant Paypal said it was exploring the launch of a stablecoin. At the time, a Paypal executive 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 regulatory scrutiny of the crypto industry.
Paypal Halts Stablecoin Development as Regulatory Concerns Loom
On January 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 do seek to move forward, we will of course work closely with the relevant regulators.” The multinational financial technology company, founded in December 1998, is one of the largest online payment systems in the world.
However, Paypal appears to have slowed down on its plans to develop a stablecoin, according to 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 a NYDFS spokesperson told him the agency could not comment on the ongoing investigations.
Paxos manages two stablecoin projects, a tokenized gold coin, and owns a Bitlicense issued by the NYDFS. There has been a major crackdown on cryptocurrency companies following the FTX collapse. Recently, crypto lender Nexo agreed to settle with the US Securities and Exchange Commission (SEC) and various state regulators over its profit product. Nexo paid regulators $45 million on a “no admit, no deny” basis and ended the program in the United States.
Most recently, Kraken was fined $30 million for its staking service program and was forced to stop offering the service to US retail customers. Kraken clarified that it will continue its staking services for customers outside of the US. 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 disclose the specific reason for Paypal’s decision to pause its stablecoin plans. The payment giant recently entered the cryptocurrency industry by launching a wide range of cryptocurrency services in 2021. Paypal has a Bitlicense issued by the NYDFS 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.
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