PayPal has been developing a stablecoin with Paxos for some time, but according to Bloomberg, the project has been shelved. It was announced this week that Paxos is under scrutiny by a New York-based financial intelligence agency.
That research firm is known as the New York Department of Financial Services and it investigates Paxos, not PayPal.
Stablecoin PayPal was almost ready
The stablecoin that Paxos and PayPal are developing is almost ready for launch. According to a PayPal spokesperson, the project still needed several weeks.
“We are investigating a stablecoin,” said a PayPal spokesperson. “If we want to make progress, we will of course work closely with the relevant regulators.”
PayPal confirmed early last year that it was working on the stablecoin, which would be backed one-to-one by the US dollar. Paxos has been granted a license to develop crypto issued by the New York regulator.
Licensing requirements were tightened in June 2022 following Terra’s collapse. One of the requirements is that stablecoins must be backed by assets that are kept separate from the issuer’s funds.
PayPal has been wanting its own stablecoin for years
In the past, Paxus developed BinanceUSD for Binance and Pax Dollar for itself.
PayPal’s stablecoin development has been in development since 2021. At the time, PayPal said the company was evaluating digital currency applications as part of its offering, but “rumors and speculation say nothing about the company’s future plans.”
“We are investigating a stablecoin; If we want to make any progress, we will of course work closely with the relevant regulators,” José Fernandez da Ponte of PayPal told me at the time.
PayPal has $604 million in cryptocurrencies
For several years now, customers have been able to buy cryptocurrencies from PayPal and store them at fintech. As of Dec. 31, PayPal had $604 million in cryptocurrencies for its customers, including Bitcoin, Ethereum, and Litecoin.
This is stated in the annual report that is traditionally (but usually due to legal obligation) filed with the US Securities and Exchange Commission. The bulk of PayPal users’ cryptocurrency is bitcoin. Of that $604 million, $291 million was bitcoin, $250 million was ethereum, and the rest was held in litecoin and bitcoin cash.
Cryptocurrency for the first time in the annual report
PayPal noted that its cryptocurrency holdings accounted for 67% of its total financial liabilities, which totaled $902 million at the end of the year. This is the first time PayPal has included a breakdown of its cryptocurrency holdings in its annual report, although customers have been able to hold cryptocurrencies with the payments giant since October 2020.
“Due to the unique risks associated with cryptocurrencies, including technological, legal and regulatory risks, we recognize a responsibility for cryptographic protection to reflect our commitment to protecting crypto for our customers.”
The company’s digital assets are stored with a third-party custodian who is contractually obligated to segregate client assets and ensure that they are not combined with the company’s own assets or other assets.
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Source: Btc Direct
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Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
