PayPal's not-yet-launched stablecoin has stopped under the influence of Paxos’ Problems
Bloomberg journalists reported that PayPal suspended work on its own stablecoin amid the problems of Paxos and BUSD.
One of the biggest shocks to the crypto community in recent times was the announcement by Paxos to stop issuing new BUSD tokens. This decision followed Wells notification from the U.S. Securities and Exchange Commission. After this news, it became known that PayPal had put its own stablecoin on pause, which was supposed to be launched in the coming weeks, since Paxos was a partner in creating the new stablecoin.
Back in January 2022, Bloomberg reported that the company was working on creating a PayPal stablecoin. The stablecoin had to be fully secured and linked to the dollar. The work on the stable coin was declassified by developer Steve Moser, who found data about his own stablecoin from PayPal in the source code of the Paypal application for the iPhone. At the same time, PayPal didn’t announce work on its own stablecoin in any way.
Recently it became known that PayPal is suspending the launch of its own stablecoin, in connection with the investigation into Paxos. A press secretary for PayPal, Amanda Miller, told Bloomberg that the company intends to cooperate with regulators for the successful operation of the stablecoin. This shows us that it is important for PayPal to understand the legal framework in the field of cryptocurrencies, in particular stablecoins.
"We are exploring a stablecoin. If and when we seek to move forward, we will, of course, work closely with relevant regulators.” – said Amanda Miller
It is not surprising that after the news from regulators, who are calling Paxos to task for the fact that BUSD is regarded as a security and requires special registration, PayPal hasn’t rushed in to launch its own stablecoin.
We have already mentioned, in a previous article, that against the background of these events, BUSD has suffered significant losses in market capitalization, but it still manages to hold on to third place among all stablecoins. Today, according to CoinGecko, BUSD's market capitalization is approximately $14 billion.
It could be assumed that because Paxos has been put in the spotlight by regulators, that this would affect the reputation of its own stablecoin. However, Pax Dollar (USDP) has not suffered and still ranks seventh in popularity and market capitalization among all stablecoins. Today, according to CoinGecko, the market capitalization of USDP is approximately $841 million.
It is also interesting that the head of Binance, Changpeng Zhao (CZ), immediately stated that the recognition of BUSD as a security by regulators would affect development within the crypto industry.
6/ "IF" BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.
— CZ 🔶 Binance (@cz_binance) February 13, 2023
As we can see, he was completely right. In order to avoid risks and violations of the law, which is riddled with ambiguities, PayPal did not issue its own stablecoin. Perhaps PayPal's cooperation with Paxos also influenced this. It can be assumed that other companies will also postpone their stablecoin projects or will not launch them in the near future against the background of current events related to controversial SEC decisions. We will be watching the developments and waiting for the official announcement of the PayPal stablecoin, we hope it will happen very soon!
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