Stablecoins have been growing in popularity, so it makes sense for other companies to join in. PayPal planned to develop its own stablecoin, but it has come to a halt brought by the close watch of cryptocurrency regulators.
PayPal Stablecoin
PayPal and Paxos have announce back in August 2022 that they were working on the development of cryptocurrency products. Paxos has had a partnership with Paypal regarding crypto since 2020, but it has had issues with the New York Department of Financial Services.
The payment service said it was "exploring" stablecoin. Like its name, the digital currency is more stable than other forms of crypto. Stablecoins are tied to fiat currencies like the US dollar, as mentioned in CNET, but signs of their weaknesses have caused a decline in the market.
Due to the NYDFS looking into PayPal's partner, Paxos Trust Company, the plans for stablecoins are put back on the shelf. Although, Paypal mentioned that they will work closely with relevant regulators should they move forward with their plans.
Paxos Trust Company
The New York-based institution has been scrutinized by the NYDFS for being involved in issues with the Federal Bank regulator. The US Office of the Comptroller of the Currency ordered to withdraw the company's application for a full banking charter, says Coin Edition.
The department has put its efforts into protecting consumers from potential risks brought by crypto markets. They are said to e in continuous contact with regulated entities to learn about the vulnerabilities and risks that consumers may face with the "crypto market volatility."
Read Also: 10 Things to Know About Stablecoins
Regulators Keeping a Close Eye
Regulators have been more vigilant in watching over activities in the crypto industry. This follows the reports of the US Securities and Exchange Commission (SEC) looking into the cryptocurrency exchange Kraken for allegedly violating securities laws.
There have been rumors of the SEC planning to get rid of crypto staking in the US for retail customers, as mentioned in Decrypt. Coinbase CEO Brian Armstrong expressed his disapproval on Twitter, saying that it would be a terrible path for the US if it was allowed to happen.
He added that staking is a very important innovation in crypto since it allows users to participate directly in "running open crypto networks. It also brings positive improvements to the industry as well as scalability, increased security, and reduced carbon footprints.
Michael Demissie, The Head of Digital Assets at the Bank of New York Mellon, said that there should be clear rules and regulations when it comes to cryptocurrency and that responsible actors are needed to offer reliable services that "live up to investors' trust."
Along with the scrutiny of regulators, the crypto market has not been doing so well as of late. The leading crypto exchange Bitcoin experienced a short drop in value below $23,000, just after it showed such promise for an increase of 40% at the beginning of the year.
Related: PayPal to Layoff 2,000 Employees Over the Next Few Weeks
