PayPal’s Stock Dumps as Banking Regulators Warn on Stablecoin Issuance

1. PayPal’s stock is suffering significant volatility after the FED issued a warning against banks.
2. The warning mentioned strict guidelines and discouraged banks from dabbling in PayPal’s stablecoin PYUSD.
3. PayPal has not made a statement regarding the negative news it has received recently.

PayPal’s stablecoin issuance did not sit well with American regulators. This is evident after banking authorities — particularly the US Federal Reserve (FED) — warned banks from making business with the global payments giant, especially with its newly-issued stablecoin PYUSD.

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Consequently, the price of PayPal’s stock suffered significant volatility. As one crypto influencer observed, the price decline occurred after authorities issued the warning.

For clarity, the FED did not prohibit banks from dabbling in PayPal’s stablecoin. Instead, the announcement said that banks must seek clearance and guidance from authorities before accepting PYUSD or creating a stablecoin infrastructure for their clients.

However, former Securities and Exchange Commission (SEC) official John Reed Stark noted that the guidelines that the FED issued would make it very difficult for banks to accept PYUSD. 

As the name suggests, PayPal’s stablecoin is pegged to the price of $1. The payments giant assured that each stablecoin it issues is backed by US dollar reserves that customers can redeem at any given time.

For its part, PayPal appears to be unfazed by the negative news that it has received from regulators. The payments giant has also yet to remark on the decline of its stock’s price. Its social media channel has not issued any announcement regarding the above-mentioned developments.

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