PayPal pauses Stablecoin development amid regulatory crackdown
- Fintech giant PayPal has paused the work on its upcoming stablecoin due to the current regulatory environment in the crypto industry.
- Its stablecoin development partner Paxos is currently facing a probe by the New York Department of Financial Services.
American fintech firm PayPal has stopped working on its upcoming stablecoin as U.S. federal agencies renew their crackdown on the crypto industry.
The past few weeks have seen several firms in the crypto space facing enforcement actions, investigations, and probes. PayPal is reportedly wrapping its head around the changing regulatory landscape before continuing the work on its stablecoin.
Stablecoin development partner Paxos faces NYDFS probe
According to a recent report by Bloomberg, PayPal was hoping to unveil its stablecoin in the coming weeks. However the plan was delayed due to the current regulatory environment in the U.S. Paxos, the crypto firm that issues Binance’s BUSD stablecoin, was working with PayPal on their stablecoin.
Earlier this week, the New York Department of Financial Services launched a probe into Paxos. The purpose and scope of the probe were not disclosed.
The escalation in regulatory scrutiny of the crypto industry paired with the probe into its partner contributed to the fintech giant putting the brakes on its stablecoin venture.
PayPal was reportedly developing the stablecoin in consultation with the relevant regulators. A spokesperson for the firm stated that they plan to work closely with regulators on the development of the stablecoin.
As per a report by Bloomberg Law, PayPal is also facing a probe by the U.S. Consumer Financial Protection Bureau. The probe revolves around accidental Venmo payments made by customers.
Several U.S. lawmakers including Senator Elizabeth Warren have reportedly pressed the bureau on this matter. The new year has brought a renewed crackdown campaign on the crypto industry that has targeted the likes of Kraken and Paxos among others.