PayPal Suspends Stablecoin Release Amid Crypto Regulators Crackdown
Digital payments giant PayPal is reportedly pausing work on its stablecoin after it was revealed that its partner in the effort is under investigation by a New York regulator.
PayPal, which just released its fourth-quarter 2022 results on Thursday, was due to announce its stablecoin in the next few weeks but is no longer doing the release, Bloomberg reported. The payment provider’s decision comes after Paxos, a stablecoin developer that previously worked with Binance and Mastercard, was reported by on Thursday CoinDesk being in the crosshairs of the New York Treasury Department, a niche department of the state government and a key player among US cryptocurrency regulators. The reasons for the investigation were unclear.
When asked for comment, a PayPay spokesperson said wealth that the company is “exploring a stablecoin.”
“If we try to move forward, we will of course work closely with the relevant regulators,” said the spokesman.
A Paxos spokesman did not immediately respond Assets Request for comments. A Treasury Department spokesman declined to comment on the ongoing investigation.
A pause in PayPal’s stablecoin development follows a series of recent regulatory actions targeting crypto companies. That acceleration prompted it to hold back from tracking its own coin, according to an anonymous source speaking to Bloomberg.
On Thursday, the Securities and Exchange Commission announced that Kraken, the third-largest cryptocurrency exchange by trading volume, had agreed to a $30 million fine after the government accused the exchange of selling unregistered securities through its staking business, resulting in a fine Users can deposit their cryptocurrency to validate blockchain transactions. In return, token holders receive a certain percentage return. As part of the deal, Kraken also agreed to remove its staking feature from its US platform
And in late January, Custodia, a crypto-focused Wyoming bank, was denied membership of the Federal Reserve System, which would have allowed the bank to take advantage of tax benefits, investment opportunities, and other conveniences.
PayPal has made a concerted foray into crypto over the past two years, allowing users to buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin through its digital wallet. In January 2022, it announced its plans to explore developing its own stablecoin. This was before crypto giants like Celsius, Voyager, and most notably FTX collapsed and went bankrupt in the months that followed.
On Thursday, PayPal CEO Dan Schulman, who ran the company when it entered the crypto world, announced his plans to retire at the end of 2023.
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