Paypal had announced plans to launch a stablecoin in the early part of 2023, but stated that it would cooperate with monetary regulators if it went ahead. However, on Feb. 10, the fee service provider revealed that it has placed the idea on hold due to increasing regulatory scrutiny of the crypto sector.
Paypal Postpones Stablecoin Release Amid Regulatory Pressure
At the start of January 2023, Paypal revealed plans to investigate the potential of launching a stablecoin. “We are exploring a stablecoin,” a spokesperson for the company declared at the time. “If and when we do seek to move forward, we will of course work closely with the relevant regulators.” The multinational payment giant is one of the largest online fee services in the world, having been established in December 1998.
However, in response to questions from the press, Paypal has now stated that it has delayed its plans to create a stablecoin. This information was confirmed by a source with knowledge of the matter, speaking to Bloomberg. Paypal was also reportedly working with Paxos, a stablecoin issuer that is now reportedly subject to inspection by the New York State Department of Financial Services (NYDFS). When asked about the rumored investigation, the NYDFS spokesperson declined to comment on any ongoing investigations.
Paxos runs two stablecoin projects, a tokenized gold coin, and holds a Bitlicense issued by the NYDFS. The current clampdown on crypto firms was prompted by the collapse of FTX. Recently, crypto lender Nexo reached a settlement with the US Securities and Exchange Commission (SEC), and various state regulators, over its revenue product. Nexo paid a total of $45 million in a “no admit, no deny” agreement with the US authorities.
Most recently, Kraken was fined $30 million and forced to discontinue its services to US retail customers. Kraken clarified that it will continue staking services to customers outside of the US. The company’s founder Jesse Powell is now calling on Congress to provide clear regulatory oversight and protect retail investors from the use of offshore firms.
Bloomberg reporters Yueqi Yang and Jennifer Surane did not provide any explanation for Paypal’s decision to pause its stablecoin plans. The payments giant has recently entered the crypto sector by launching a number of cryptocurrency services in 2021. Paypal holds a conditional Bitlicense from the NYDFS and is expected to receive a full license as early as June 2022.
What do your thoughts on Paypal’s decision to put the brakes on their stablecoin plans? Share your comments with us.
