A new report from Bloomberg suggests that PayPal has paused its plans to launch its own stablecoin. Bloomberg stated that a PayPal spokesperson had previously confirmed it was “exploring a stablecoin”, but increasing sensitivity and anxiety surrounding the cryptocurrency industry has seen the digital wallet giant take a step back to take stock of the sector’s regulatory challenges. It’s by no means a decision that will have a negative impact on PayPal’s bottom line.
The company remains on a stable growth path if its latest Q4 2022 earnings call is anything to go by. Revenues were up 7% to $7.4 billion, as more industries continue to embrace the use of secure e-wallets as convenient payment methods. Worldpay’s Global Payments Report suggests e-wallets will generate the majority (52.5%) of transactional values by 2025.
That’s thanks largely to their integration in fast-growing industries. In the US, its newly licensed iGaming scene is readily embracing the digital wallet trend. Those who look to utilize the 888casino NJ promo code in the Garden State of New Jersey can deposit using PayPal accounts as an alternative to conventional debit or credit cards and visiting local casino cages in Atlantic City. It’s a similar story in other US states with their own regulated iGaming markets. In e-commerce, major retailers also partner with PayPal to offer “Pay in 4” and “Pay Monthly” Buy Now, Pay Later options, with the former option a zero-interest deal for consumers.
PayPal has been testing the stablecoin water for over 12 months
PayPal’s move into the cryptocurrency space was first discovered in January 2022. Developer, Steve Moser, stumbled upon hidden code and images detailing a prospective “PayPal Coin” within its native iOS app.
It was widely reported that PayPal was working in lockstep with Paxos Trust over the development of its PayPal Coin. Paxos Trust, which boasts its own blockchain infrastructure platform and is the owner of the third-largest stablecoin, has recently come under regulatory scrutiny from the New York State Department of Financial Services (NYDFS). After news of the NYDFS’ investigation into Paxos Trust broke, the organization used its official Twitter handle to comment on the recent “speculation” surrounding its relationship with the U.S. Office of the Comptroller of the Currency (OCC).
Despite reports that it had been forced to withdraw its application for a “national trust bank charter”, the official tweet claims this is not the case and that it “continues to work constructively with the OCC”. It could just be a coincidence that the moment Paxos gets regulatory scrutiny, PayPal opts to park its crypto ambitions. However, it’s not the only development that puts question marks over the cryptocurrency industry.
Question marks over the crypto sector’s integrity could weigh heavily on PayPal’s decision-making
Of course, the world-renowned collapse of the FTX exchange has hit the value of crypto assets hard and damaged the credibility of the sector in the process. The U.S. Securities and Exchange Commission (SEC) has also been locked in a dispute with cryptocurrency exchange Kraken. The SEC took umbrage with Kraken’s staking product, with its chairman, Gary Gensler, insisting that all forms of “staking-as-a-service” products must “provide the proper disclosures and safeguards required by our laws”. The SEC claimed Kraken’s staking services are an illegal sale of securities. Although Kraken stood its ground, denying any wrongdoing, it did agree to pay a $30 million settlement with the SEC, before discontinuing all staking services stateside.
The settlement has sent shockwaves across other major cryptocurrency exchanges. In recent months, Coinbase and Binance – two of the world’s biggest crypto exchanges by traded volumes – have also started to offer staking-as-a-service products. According to PYMNTS, Coinbase is now the industry’s second-biggest depositor of staked ether, which could put it in a vulnerable position with the SEC. It’s no surprise that the Coinbase share price has fallen over 29% in the last six months to February 15.
Nevertheless, PayPal clearly has a thirst and vision for the future of the cryptocurrency sector. It was recently revealed that the digital payments giant holds upwards of $291 million worth of Bitcoin and $250 million worth of Ethereum, based on its annual report submitted to the SEC earlier this month.