PayPal officials have announced that they have paused work on their stablecoin. The online payment services platform had announced that it was working on the development of a stablecoin.
Regulators have Launched Scrutiny
PayPal Holdings is no longer working on the development of the stablecoin. For now, the payment services giant has paused the development of the stablecoin.
Since the end of 2022, the regulatory authorities have become very aggressive against cryptocurrencies. They are launching inquiries against cryptocurrency firms and projects.
Therefore, every firm that is linked with cryptocurrencies in one way or another would be impacted by the recent developments.
There is also the possibility that PayPal may come under the microscope of US regulators. This is the reason why the company has announced that it is going to pause the development of its stablecoin.
The regulators have even increased scrutiny against the stablecoins. PayPal is of the view that it would be a better idea if it stops the development of its own stablecoin.
In addition to the above, PayPal Holdings has also paused its development because the Department of Financial Services of New York has gone after one of its partners.
The information suggests that a probe has been launched by the particular regulator against PayPal’s key project.
PayPal announced a while back that it was undergoing the development phase of the stablecoin. They were trying their best to ensure that they debuted the token in the next few weeks.
The payment services giant confirmed that their stablecoin would be pegged with the US dollar. For now, the users eager to get their hands on the stablecoin have to wait until the development work is reinstated.
PayPal Wants to Understand Regulatory Landscape
As per PayPal officials, they were very excited about the development of their stablecoin. However, they have decided to pause the development work as they want to recalibrate their understanding of the technology.
The company has been closely monitoring the involvement of the regulatory authorities with cryptocurrency projects.
It may have been realized that many changes have started to take place when it comes to cryptocurrencies. Since the November crash of the FTX exchange, the regulators’ aggression has grown against the crypto industry.
Since then, the regulatory landscape has changed against cryptocurrencies and digital assets. As of now, it is not clear whether the regulators are going to cooperate with crypto firms or attempt to ban them entirely.
Until the regulatory landscape becomes clearer and more transparency is introduced, they will not continue work on their stablecoin.
Just recently, the New York regulator has launched scrutiny against one of the key partners of PayPal. The particular firm being investigated by the financial regulator in New York State is Paxos Trust Co.
According to sources, the particular partner was involved with PayPal Holdings for the development of the stablecoin. Both firms were working alongside each other, taking advantage of their technology to come up with the token.
The teams at PayPal have issued a public statement explaining what their next course of action is going to be.
The PayPal spokesperson, Amanda Miller has stated that their goal is to complete their exploration of the stablecoin.
She stated that they are looking forward to gathering more knowledge and understanding around stablecoins. They want to understand the position of the regulators against the stablecoins.
Until that is clear, they will not be entering the stablecoin market. They do want to bring reforms to the stablecoin market and are willing to work with the regulators to make it happen.
While PayPal Holdings has issued a statement, it is still not clear what Paxos has in mind. The company’s officials are yet to make any comment on the recent developments.
Paxos is a company that has worked on the development of many stablecoins. One of its most prominent collaborations for the development of a stablecoin was with Binance, for the creation of Binance USD (BUSD).