Digital Payments company PayPal has reportedly put its stablecoin project on hold, Bloomberg reported on Friday. Interestingly, Paxos, which was supposed to provide the backend solutions for PayPal’s stablecoin was on Thursday reported to be under investigation by the New York Department of Financial Services (NYDFS).
The quick succession in which the two developments were reported gave rise to the buzz that PayPal’s decision to pause its stablecoin plan may be linked to Paxos being under probe by the state regulators.
Paxos has several crypto and non-crypto businesses. It provides the backend solution for Binance’s stablecoin BUSD and runs its own stablecoin Paxos USD (USDP). It also has a cryptocurrency exchange called itBit. Besides, it has a gold-backed cryptocurrency PAXG. It’s yet not clear what Paxos is being probed for.
While Paxos has denied this, rumors that the US Office of the Comptroller of the Currency (OCC) is planning to ask Paxos to withdraw its application for a full banking charter are doing the round. OCC provided a provisional banking charter to Paxos in 2021.
In the wake of the Terra/Luna collapse in early May 2022, NYDFS issued a set of guidelines for all crypto companies, which Paxos is believed to be working to properly follow.
