PayPal keeps pause on crypto purchases despite FCA approval
PayPal has been granted approval by the Financial Conduct Authority (FCA) to provide specific crypto asset activities in the United Kingdom, as per the official FCA register dated Oct. 31, 2023.
This registration marks yet another milestone for the US-based payment giant, which first initiated crypto buying and selling services in 2021.
Despite the approval, PayPal will maintain a temporary pause on the ability for UK customers to purchase crypto assets. Starting from October 1, PayPal’s UK customers have been unable to make new purchases of cryptocurrencies with an expected resumption in early 2024. However, users who already bought crypto using their PayPal accounts can still hold onto them or sell them whenever they want.
The FCA has approved PayPal as an authorized electronic money institution and consumer credit firm, along with its registration as a crypto asset business.
From Nov. 1, PayPal’s UK customers will be transitioned to a new Britain-based entity from PayPal Europe, reflecting Britain’s exit from the European Union. The FCA register details that certain restrictions are placed on PayPal’s financial services activities, including limitations on expanding its current crypto asset offerings.
The restrictions include a halt on onboarding new customers and limiting existing customers to holding and selling functionality only. PayPal is also restricted from expanding into crypto exchange services, initial coin offerings (ICOs), staking, P2P exchange, and DeFi activities such as lending and borrowing.
PayPal became the fourth firm to receive the FCA’s crypto registration in 2023, following Interactive Brokers, Bitstamp, and Komainu. The approval comes shortly after PayPal briefly paused the ability for its UK customers to buy cryptocurrencies like Bitcoin in early October, attributing the pause to efforts to comply with new regulations in the country.
The FCA is cracking down on potential money laundering risks linked to crypto transactions. These new rules line up with the guidelines set out by the Financial Action Task Force’s “Travel Rule,” which kicks in on September 1. Additionally, the FCA has laid down stricter regulations for crypto advertising in the UK.
The new regulations also require firms promoting crypto products or services to include a clear risk warning in their promotions and verify that individuals have the necessary knowledge and experience to invest in cryptocurrencies.
In light of these regulatory changes, PayPal is adjusting its offerings in the UK to stay in line with the shifting landscape of crypto rules and consumer safeguards. The company has been making some big moves in the world of crypto, especially in the United States. One major step they’ve taken is the launch of their stablecoin, PayPal USD (PYUSD), which they introduced just earlier this month.
