Paypal allegedly stops stablecoin project

PayPal has put on hold the launch of its upcoming stablecoin offering in response to the increased regulatory oversight of the cryptocurrency sector.

The move comes as the firm aims to better understand the changing regulatory landscape around digital assets. The company hoped to release its stablecoin within weeks, but the delay will give PayPal time to work with regulators and stakeholders to navigate potential regulatory challenges.

PayPal spokesperson, Amanda Miller, confirmed that the company is “exploring a stablecoin” but clarified that the firm would only proceed with the launch of its stablecoin after working closely with regulators. The pause on the project follows reports that the New York State Department of Financial Services (DFS) is investigating Paxos Trust, the cryptocurrency firm that PayPal was working with on its stablecoin effort. The DFS regulates New York-based Paxos, which issues a token that ranks as the third-largest stablecoin.

The DFS spokesperson indicated that the department is in continuous contact with regulated entities to understand risks and vulnerabilities to consumers and the institutions themselves from crypto market volatility.

The regulatory scrutiny of stablecoins has been increasing in recent months, with lawmakers and financial regulators calling for better consumer protection, tax compliance, and anti-money laundering (AML) measures for cryptocurrencies.