PayPal UK to suspend cryptocurrency purchases until early 2024

It will take time for PayPal to comply with the new standards set by the Financial Conduct Authority (FCA).

PayPal announced that it will temporarily stop its UK users from buying cryptocurrencies on its platform starting in October.

The move comes in response to changing regulatory guidelines from the UK's main market regulator, the Financial Conduct Authority (FCA).

PayPal suspends cryptocurrency purchases

The suspension will take effect on October 1 and is expected to last until early 2024, according to an email received by some UK users on Wednesday.

“Your cryptocurrencies remain safe, you can keep them on our platform for free, and you can also sell your cryptocurrencies at any time,” the company clarified.

PayPal enabled encryption services for UK customers in September 2021, allowing them to buy, sell and hold cryptocurrencies. Back in October 2020, the product was first launched in the US.

Supported assets have so far been limited to Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC). In the first quarter, the firm held more than $1 billion worth of such assets on its balance sheet on behalf of clients.

Despite the deceptive simplicity of its cryptocurrency business model, the FCA is now requiring cryptocurrency firms to "implement additional steps before customers purchase cryptocurrencies." PayPal said it works closely with regulators to ensure compliance wherever it operates.

"We apologize for the inconvenience and will notify you when we implement the required changes to the encryption experience," the company said.

Cryptocurrency companies have credited British regulators and policymakers for embracing cryptocurrencies and helping provide a clear path to industry compliance compared with the U.S.

In late June, the country passed a bill bringing cryptocurrency and stablecoin businesses under regulation while empowering the FCA to create a clear regulatory framework for the industry.

Last month, the FCA issued guidelines claiming that crypto memes could constitute a criminal offense if they do not comply with existing financial facilitation laws.

PayPal's Stablecoin Startup

PayPal's latest foray into the crypto industry is an attempt to launch its own stablecoin, which will be pegged to the U.S. dollar.

Announced last week, PYUSD will be based on Ethereum and backed by cash, U.S. Treasury bills and other cash equivalents. While currently only available for cryptocurrency and Web 3 related activities, PayPal plans to roll it out to cost transfers between users and merchants globally.