PayPal suspends UK crypto services, but continues to push cryptocurrency across the board

Global digital payments giant PayPal plans to stop offering cryptocurrency transactions to its UK customers this October, in a surprise move. The action is in line with a recent regulatory shift initiated by the UK's Financial Conduct Authority (FCA).

Background of PayPal's decision

On October 1, UK PayPal users will observe a temporary suspension of cryptocurrency services. This disruption is expected to last until early 2024, with a focus on the changing regulatory environment set by the FCA.

Reassuringly, the payments giant clarified that “your cryptocurrencies remain safe.” Additionally, the platform ensures users have zero fees for holding cryptocurrencies and expands the freedom to sell assets at their convenience.

In September 2021, UK users were approved by PayPal to get involved in cryptocurrency transactions. This strategic move mirrors their US launch in October 2020. Currently, the digital currencies that are getting the most attention are Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). As of the first quarter, an impressive over $1 billion in crypto assets has been safely held in PayPal's vaults on behalf of its customers.

Regulatory Dance

The simplicity of PayPal's cryptographic blueprint may fool many. However, recent FCA requirements require cryptocurrency entities to integrate supplementary protocols before facilitating cryptocurrency purchases. PayPal remains vigilant, emphasizing its commitment to complying with global regulatory norms and reiterating: "We apologize for the inconvenience and promise to keep you informed."

Interestingly, the U.K. has won praise from crypto giants for its advanced regulatory stance. Notably, the country stepped up its commitment to bring cryptocurrency and stablecoin businesses under regulation in June. This gives the FCA an authoritative role in developing a transparent operating framework for cryptocurrencies.

However, with power comes caution. Last month, the FCA highlighted the risks associated with crypto memes, suggesting there could be legal consequences for non-compliance.

PayPal's Ambitious Roadmap

In a recent development, PayPal announced that it is taking a risk to create its own proprietary stablecoin called PYUSD. Pegged to the U.S. dollar, the ethereum-based PYUSD will be backed by cash, U.S. Treasuries and similar assets. Beyond its cryptocurrency and Web 3.0 role, PayPal envisions PYUSD reshaping cost-effective user and merchant transactions around the world.

In related reports, PayPal CEO Dan Schulman announced his decision to step down in September.