Digital payments giant PayPal is reportedly taking a break on stablecoins following news that its venture partner is being investigated by New York regulatory agencies.
PayPal, which just released its fourth-quarter earnings for 2022 on Thursday, is set to debut its stablecoin in the next few weeks, but it won’t launch again, Bloomberg reported. The payment provider’s decision comes after Paxos, a stablecoin developer that has previously partnered with Binance and Mastercard, was informed on Thursday by CoinDesk be in the crosshairs of the New York Department of Financial Services, a niche branch of the state government and a key player among US cryptocurrency regulators. The reason for the investigation is unclear.
When asked for comment, a PayPay spokesperson said fortune that the company is “exploring stablecoins.”
“If and when we seek to move forward, we will of course work closely with the relevant regulators,” the spokesperson said.
A Paxos spokesman did not immediately respond Fortune’s ask for comments. A spokesman for the Department of Financial Services declined to comment on the ongoing investigation.
A pause in the development of PayPal’s stablecoin follows a suite of new regulatory actions against crypto companies. The acceleration prompted them to back off from pursuing their own coin, according to an anonymous source who spoke to Bloomberg.
On Thursday, the Securities and Exchange Commission announced that Kraken, the third largest cryptocurrency exchange by trading volume, agreed to a $30 million fine after the government accused the exchange of unregistered securities through a staking business, which allows users to place cryptocurrency in escrow. . to help validate blockchain transactions. In the exchange, token holders receive a certain percentage yield. As part of the settlement, Kraken also agreed to remove the staking feature from its platform in the US
And at the end of January, Custodia, a crypto-focused bank in Wyoming, was denied membership in the Federal Reserve System, which would have allowed the bank to use tax benefits, investment opportunities, and other comforts.
PayPal has made a concerted push into crypto in the past two years, allowing users to buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin through their digital wallet. In January 2022, they announced plans to explore the development of their own stablecoin. This was before crypto behemoths like Celsius, Voyager, and the most famous FTX collapsed and went bankrupt in the following months.
On Thursday, PayPal CEO Dan Schulman, who led the company when it made a splash into crypto, announced plans to retire at the end of 2023.
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