The payment giant PayPal recently launched a new stablecoin called PayPal USD (PYUSD) on August 7, 2023. However, on August 14, 2023, PayPal notified certain UK users via email about the temporary suspension of its cryptocurrency buying services. This suspension is set to begin on October 1, 2023, and is expected to continue until early 2024, though no specific resumption date was provided.
While the ability to purchase cryptocurrencies will be unavailable during this period, users will still retain the option to hold and sell their existing cryptocurrency holdings. It remains uncertain whether users will have the capability to transfer their cryptocurrency to external wallets or other exchanges, as this functionality seems to be currently restricted to US users.
PayPal’s decision to pause these services in the UK is a response to new regulatory requirements imposed by the UK’s Financial Conduct Authority (FCA). Although PayPal did not elaborate on the exact nature of these rules in their communication.
One of the regulatory changes involves the upcoming enforcement of the Crypto Travel Rule by the FCA in September 2023. This rule mandates that cryptocurrency companies collect information about all parties involved in transactions. However, the September deadline for the Crypto Travel Rule does not align with PayPal’s decision to suspend its crypto services starting in October.
Additionally, the FCA recently introduced updated rules for the promotion and advertising of cryptocurrencies to potential investors. These rules are set to take effect in October but do not appear to directly correlate with the user-focused requirements mentioned by PayPal.
Interestingly, while PayPal is temporarily reducing its cryptocurrency services in the UK, it is simultaneously expanding its crypto offerings in the United States. This strategic divergence highlights PayPal’s approach to navigating varying regulatory landscapes in different countries.
In a report by Todayq News on August 14, 2023, PayPal’s senior vice presidents of blockchain, crypto, and digital currency suggested that the stablecoin PYUSD could potentially find extensive use in the realm of DeFi. Furthermore, another report published on August 14, 2023, revealed that PayPal introduced a Cryptocurrencies Hub feature that enables users to seamlessly interact with Bitcoin and other cryptocurrencies.