PayPal Pauses Crypto Purchases In UK Due To Regulatory Issue
In an email communication sent to a select group of users, PayPal (NASDAQ: PYPL) announced its decision to temporarily halt cryptocurrency buying services in the United Kingdom. This strategic pause is slated to commence on October 1, 2023, with a tentative resumption date set for early 2024.
During this suspension period, while purchasing crypto will not be possible, PayPal reassures its users that they will retain the ability to hold and sell their existing cryptocurrency holdings. It’s important to note that, at present, the option to transfer cryptocurrency to external wallets and exchanges is exclusively available to users within the United States.
PayPal attributes the decision to suspend crypto purchases to the introduction of new regulations by the UK Financial Conduct Authority (FCA). These regulations mandate PayPal to undertake additional steps before enabling customers to make cryptocurrency purchases.
“Your crypto remains safe. You can keep it on our platform at no charge. You can also sell your crypto at any time,” the payment platform said, expressing regret for any inconvenience this pause may cause to its valued customers.
While the specific regulations in question were not explicitly outlined, it’s worth mentioning that the UK is set to enforce a Crypto Travel Rule in September 2023. This rule necessitates crypto businesses to gather information about parties involved in transactions. Notably, this timeline doesn’t exactly line up with PayPal’s intended October service modification.
Furthermore, the FCA recently introduced fresh guidelines concerning the promotion and advertising of cryptocurrencies to potential investors. These guidelines, effective from October onward, aim to ensure responsible promotional practices in the crypto space. However, these guidelines appear to differ from the customer-centric requirements mentioned by PayPal.
Of particular significance is the contrast between PayPal’s UK service reduction and its concurrent expansion of crypto offerings in the United States. The company recently introduced its own USD stablecoin on August 7, with indications suggesting potential extensive usage in the realm of Decentralized Finance (DeFi). Reports also suggest that PayPal is integrating its various features into a comprehensive “Cryptocurrency Hub.”
In the US, the Federal Reserve has recently issued a comprehensive policy statement clarifying its stance on state member banks engaging in certain activities involving digital currencies, particularly dollar tokens, merely days after PayPal launched its stablecoin.
In essence, the policy statement sets forth a presumption that the Federal Reserve will exercise its discretion to limit state member banks and their subsidiaries to engaging as principal in activities that are permissible for national banks. In order to confirm compliance with this prerequisite, a state member bank must obtain written confirmation of supervisory nonobjection from the Federal Reserve before commencing the intended activities.
Information for this story was found via Crypto Slate and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
