As per its annual report, PayPal, the leading financial institution, revealed that it held $604 million worth of crypto assets on behalf of its customers as of December 31, 2022.
The report showed that the company held $291 million worth of Bitcoin and $250 million in Ethereum. Another $63 million is held in other digital assets, such as Bitcoin Cash and Litecoin, although the firm did not provide a breakdown for these two. PayPal stated that a third-party custodial service provider holds digital assets in its name to benefit its customers.
PayPal highlighted the uncertain regulatory environment as a risk to its business. The company stated that the regulatory status of some cryptos remains unclear under current law. It added that the rapidly evolving regulatory landscape could require the firm to obtain additional licensing.
The multinational financial technology firm noted that its “current and planned customer cryptocurrency offerings could subject us to additional regulations, licensing requirements, or other obligations.”
The lack of regulatory clarity in the US has been a growing concern for crypto companies operating in the country, with stakeholders in the industry calling for regulatory guidance. The US Securities and Exchange Commission (SEC) recently took enforcement action against Kraken for its staking product. The development resulted in a $30 million fine for the crypto exchange.
PayPal Suspends Stablecoin Project
According to a report by Bloomberg, PayPal has suspended its works on its stablecoin. It cited increased regulatory scrutiny of the crypto industry and a recent investigation of its partner Paxos.
Paxos is currently being investigated by the New York Department of Financial Services (NYDFS). However, the company has denied claims that another regulator asked it to withdraw its application for a banking charter.
PayPal had originally planned to launch its dollar-pegged stablecoin in a few weeks, but a spokesperson for the company confirmed that it is actively exploring crypto and will work with regulators when it resumes work on the project.
Stablecoins have come under increased scrutiny from financial regulators following the collapse of Terra’s algorithmic stablecoin. Financial regulators worldwide expressed concerns about their potential impact on the broader financial economy.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.