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 went ahead, it would work closely with financial regulators. However, a source noted on February 10 that Paypal has put the concept on hold for now amid regulatory scrutiny of the crypto industry.
Paypal halts development of Stablecoin due to regulatory concerns
On January 7, 2023, it was reported that Paypal was investigating the creation of a stablecoin. “We are exploring a stablecoin,” a Paypal executive told reporters at the time. “If and when we try to move forward, we will of course work closely with 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 plans to develop a stablecoin, according to a Bloomberg report citing a person with knowledge of the matter. Paypal also worked 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 of the alleged investigation, but was told by a spokesperson for the NYDFS that the agency could not comment on ongoing investigations.
Paxos manages two stablecoin projects, a tokenized gold coin, and holds a bit license issued by the NYDFS. There has been a significant crackdown on cryptocurrency businesses following the collapse of FTX. Recently, cryptolender Nexo agreed to settle with the US Securities and Exchange Commission (SEC) and several government regulators regarding its earning product. Nexo paid regulators $45 million on a “no admit, no deny” basis and ended the program in the US.
Recently, Kraken was fined $30 million for its betting service program and was forced to stop offering the service to US retail customers. Kraken clarified that it will continue its efforts services for customers outside the US. Founder Jesse Powell is calling on Congress to provide clear regulatory guidelines 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 payments giant recently entered the cryptocurrency industry by launching a wide range of crypto services in 2021. Paypal has a NYDFS-issued Bitlicense and converted its conditional Bitlicense to a full license in June 2022.
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Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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