PayPal halts work on stablecoin amid increased crypto scrutiny by regulators

PayPal Holdings Inc. suspends work on its stablecoin as regulators step up scrutiny of cryptocurrencies and a key project partner faces an investigation by the New York State Department of Financial Services.

PayPal had hoped to launch the stablecoin, which will be backed one-to-one by the US dollar, in the coming weeks, but will delay that work as it seeks to understand the evolving regulatory landscape for these digital assets, according to a person with knowledge. of the material. New York regulators have been investigating Paxos Trust, a cryptocurrency company that 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 seek to move forward, we will of course work closely with relevant regulators.”

Paxos did not respond to requests for comment.

Stablecoins are meant to hold a fixed value, and some are backed by a corresponding reserve of assets such as cash and bonds. Bloomberg News first reported last year that San Jose, Calif.-based PayPal was exploring launching its own stablecoin as part of its cryptocurrency push.

New York-based Paxos, issuer of a Binance-branded token that ranks third among stablecoins, is regulated by the state Department of Financial Services. On its website, Paxos outlines its commitment to consumer protection and states that reserves for the two stablecoins it issues are held entirely in cash and US Treasury bonds. The company also issues its own stablecoin called Pax Dollar.

PayPal announced last year that the Department of Financial Services had granted the company a “BitLicense,” which governs companies working with virtual currencies. PayPal said at the time that it was the first company to convert a conditional BitLicense to a full license.

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