PayPal has paused stablecoin development amid a regulatory crackdown

  • Financial technology giant PayPal has paused work on its upcoming stablecoin due to the current regulatory environment in the cryptocurrency industry.
  • Its stablecoin development partner, Paxos, is currently facing investigation by the New York Department of Financial Services.

US financial technology company PayPal has halted work on its next stablecoin as US federal authorities have renewed their crackdown on the cryptocurrency industry.

In recent weeks, many companies in the crypto space have faced enforcement actions, investigations, and investigations. PayPal is said to be wrapping its head around the changing regulatory landscape before continuing work on its stablecoin.

Stablecoin development partner Paxos faces NYDFS test

According to a recent report from Bloomberg, PayPal was hoping to unveil its stablecoin in the coming weeks. But the plan has been delayed by the current regulatory environment in the US. Paxos, the cryptocurrency issuing the BUSD stablecoin, has been working with PayPal on its stablecoin.

Earlier this week, the New York Department of Financial Services launched an investigation into Paxos. The purpose and scope of the investigation was not disclosed.

An escalation in regulatory scrutiny in the cryptocurrency industry coupled with an investigation into its partner, the fintech giant has helped put the brakes on the stablecoin project.

PayPal reportedly developed the stablecoin in consultation with relevant regulatory authorities. A spokesperson for the company stated that they plan to work closely with regulators on the development of the stablecoin.

According to a report by Bloomberg Law, PayPal is also facing an investigation by the US Consumer Financial Protection Bureau. The investigation revolves around accidental Venmo payments made by customers.

Reportedly, several US lawmakers, including Senator Elizabeth Warren, have pressured the agency on the issue. The new year brought with it a renewed crackdown on the crypto industry targeting the likes of Kraken and Paxos.

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