Based on reports from various news outlets, PayPal has apparently decided to cancel the stablecoin launch that was expected to be announced in the coming weeks, despite having released its fourth quarter financial results on Thursday.
Back in August 2022, PayPal and stablecoin issuer Paxos Trust announced that they were developing a cryptocurrency product.
Since 2020, New York-based Paxos has maintained a cryptocurrency agreement with PayPal, despite issues with the New York Department of Financial Services.
Regulator Go After PayPal Crypto Partner, Paxos
According to reports, the NYDFS is investigating Paxos, although the extent of the investigation has not been disclosed in detail.
While this is being developed, the US Office of the Comptroller of the Currency continues to focus on protecting consumers from the dangers associated with the crypto market.
The OCC is reportedly in constant contact with regulated companies to understand their weaknesses and consumer obligations due to the volatility of the cryptocurrency market.
Image: CoolWallet
Paxos stablecoins include the Pax dollar (USDP) and Binance USD (BUSD), a stablecoin issued through a white label company with the Binance trademark.
Paxos emphasizes its dedication to consumer protection on its website and states that the assets for the two stablecoins it produces are held entirely in cash and US Treasuries.
In an emailed statement, a PayPal representative said:
“We are exploring stablecoins; if and when we seek to move forward, we will certainly work with the relevant regulators.
Popularity and Use Cases of Stablecoins
Stablecoins are digital currencies developed to maintain a consistent value with other assets, often fiat currencies such as dollars or euros.
In recent years, they have become popular due to their ability to combine the benefits of cryptocurrencies, such as fast and cheap cross-border transactions, with the stability of traditional fiat currencies.
Image: Investopedia
This makes them an attractive alternative to volatile cryptocurrencies such as Bitcoin and Ethereum.
In the rapidly growing world of cryptocurrencies, the growing popularity of stablecoins has been fueled by the demand for a more stable and reliable method of transaction.
Meanwhile, the recent failure of some of the top cryptocurrency market participants, especially FTX, has eroded investor confidence in what was once considered the next big thing in finance.
PayPal’s suspension of stablecoin creation follows a series of recent regulatory actions against crypto businesses. According to an anonymous source who spoke to Bloomberg, the move forced the payment company to stop working on its own coin.
Crypto total market cap at $966 billion on the weekend chart | Chart: TradingView.com
In the past two years, PayPal has taken cryptocurrency seriously, allowing users to buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin using its digital wallet.
In January last year, PayPal announced its intention to learn to create its own stablecoin. This was long before crypto giants such as Celsius, Voyager, and most famously FTX went bankrupt and collapsed in the following months.
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