PayPal Holdings Inc. is halting work on its stablecoin as regulators increase scrutiny of the cryptocurrency and a major participant in the project faces an investigation by the New York State Department of Financial Services.
paypal In the coming weeks, it was expected to introduce the stablecoin, which would be backed one-for-one by the US dollar, but the work would be delayed as it tries to understand the changing regulatory landscape for such digital assets. is, to the best of one’s knowledge, the matter. New York regulators are investigating Paxos Trust, a cryptocurrency firm PayPal was working with on its stablecoin effort, Bloomberg News reported this week.
“We are exploring a stablecoin,” PayPal spokeswoman Amanda Miller said in an emailed statement. “If and when we choose to move forward, we will of course work closely with the relevant regulators.”
Paxos did not respond to requests for comment.
Stablecoins are intended to hold a set value, and some are underpinned by a matching reserve of assets such as cash and bonds. Bloomberg News first reported last year that San Jose, California-based PayPal was exploring the launch of its own stablecoin as part of its cryptocurrency push.
New York-based Paxos, a Binance-branded token issuer that ranks as the third largest stablecoin, is regulated by the state’s Department of Financial Services. On its website, Paxos stresses its commitment to consumer protection, saying it is held entirely in cash and in the US Treasury for issuance for both stablecoins. The company also issues its own stablecoin called the Pax Dollar.
PayPal announced last year that the Department of Financial Services had granted the firm a “bitlicense,” which regulates businesses dealing with virtual currencies. PayPal said at the time that it was the first company to convert a conditional BitLicense to a full BitLicense.
© 2023 Bloomberg L.P.