PayPal Pauses Work on Stablecoin Amid Increased Crypto Scrutiny by Regulators

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PayPal Pauses Work on Stablecoin Amid Increased Crypto Scrutiny by Regulators

PayPal Holdings Inc. is pausing work on its stablecoin as regulators increase scrutiny of cryptocurrencies and a key partner in the project faces a probe by the New York State Department of Financial Services.

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PayPal had hoped to debut the stablecoin, which will be backed one for one by the US dollar, in the coming weeks, but will delay that work as it seeks to understand the changing regulatory landscape for such digital assets, according to a person with knowledge of the matter.

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New York regulators have been investigating Paxos Trust, a cryptocurrency firm PayPal was working with on its stablecoin effort, Bloomberg News reported this week.

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“We are exploring a stablecoin,” Amanda Miller, a spokeswoman for PayPal, said in an emailed statement. “If and when we seek to move forward, we will, of course, work closely with relevant regulators.”

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Paxos didn't respond to requests for comment. Stablecoins are intended to hold a set value, and some are underpinned by a matching reserve of assets such as cash and bonds. Bloomberg News first reported last year that San Jose, California-based PayPal was exploring the launch of its own stablecoin as part of its cryptocurrency push.

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New York-based Paxos, issuer of a Binance-branded token that ranks as the third-largest stablecoin, is regulated by the state's Department of Financial Services. On its website, Paxos stresses its commitment to consumer protection and says that reserves for both of the stablecoins it issues are held wholly in cash and US Treasuries. The company also issues its own stablecoin called Pax Dollar.

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