PayPal halts stablecoin project, partner Paxos also issuer of BUSD

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PayPal Pauses Stablecoin Project

Bloomberg cited sources familiar with the matter that PayPal has paused its stablecoin project due to increased regulatory scrutiny on cryptocurrencies, with its primary stablecoin partner Paxos under investigation by the New York State Department of Financial Services.

The sources indicated that PayPal was planning to launch a U.S. dollar stablecoin in the coming weeks, but decided to postpone the stablecoin project due to the evolving regulatory environment surrounding digital assets.

Amanda Miller, a spokesperson for PayPal, stated:

We are indeed exploring stablecoins, and if we were to move forward with the project, we would certainly collaborate closely with the relevant regulatory authorities.

Scrutiny on Stablecoins: Fact or Rumor?

Earlier reports circulated rumors within the crypto community and media that stablecoin issuer Paxos was asked by the U.S. Office of the Comptroller of the Currency (OCC) to withdraw its banking charter application, a claim Paxos denied on Twitter.

PayPal partnered with Paxos in July 2020, with the former continuously integrating with cryptocurrencies, offering trading services, digital wallet transfers, and other functionalities. Paxos, a recipient of a $142 million funding round at the end of 2020, also included PayPal as an investor.

In 2020, Paxos and payment service provider BitPay jointly applied for a national trust bank charter with the OCC, which has not been approved yet. However, Paxos obtained a BitLicense from the New York State Department of Financial Services last year.

Paxos' official Twitter account's latest tweet on 2/9 clarified that there was no request from the OCC to withdraw its charter application and did not respond to Bloomberg's inquiries.