PayPal Halts Development of Upcoming Stablecoin Amid NYDFS Scrutiny

• The project was expected to come in the following weeks.
• NYDFS is looking into the stablecoin issuer Paxos.

Bloomberg reports that due to regulatory worries in the sector, PayPal has halted the development of its upcoming stablecoin. In light of yesterday’s announcement of an inquiry into Paxos. The payment platform is suspending the development of its own stablecoin.

PayPal remained bullish on the release of its stablecoin initiative. Which was planned to be backed one-to-one by the US dollar. Additionally, the project was expected to come in the following weeks before the work was put on hold today.

Increased Scrutiny by Authorities

New York’s Department of Financial Services is looking into the stablecoin issuer Paxos. Which played a significant role in the PayPal operation. To comprehend the shifting legal environment for such digital assets, PayPal has reportedly halted development since the news of the investigation.

While the specifics of why the New York agency is conducting the probe remain unknown, it has been claimed that they want to increase their consumer protection activities in 2023.

In June, the New York Department of Financial Services established guidelines for stablecoins, requiring issuers to guarantee that their stablecoins are completely backed by assets that are kept separate from the issuers’ money and are routinely testified to.

Following the demise of the Terra stablecoin ecosystem, the guidelines were established with a particular emphasis on asset-backed stablecoins.

As part of the payment firms’ ongoing participation in the digital asset sector, work on a PayPal stablecoin began last year. Plus, the Department of Financial Services issued the payment provider a BitcLicense last year. This converts a conditional BitLicense into a complete one, making the firm the first to achieve this distinction.