Payments giant PayPal will stop UK customers from purchasing cryptocurrency while it makes changes to stay in line with upcoming regulatory requirements.
The UK financial regulator will bring in rules affecting how companies can market crypto services on 8 October. They include a “cooling-off period” for first-time buyers and scrapping “refer a friend” bonuses.
PayPal, in an email to customers, said it will “temporarily pause” crypto purchases on its platform on 1 October and aims to re-enable them in early 2024.
When contacted by UKTN a spokesperson for PayPal said: “We are temporarily pausing the ability for UK customers to buy crypto through PayPal as we work to satisfy new regulatory requirements. PayPal customers who currently hold crypto can keep it on our platform at no charge and are also able to sell their currency at any time.”
PayPal’s spokesperson added it is “deeply committed to our compliance obligations” and is working with authorities.
The news, originally reported by crypto media outlets including CoinJournal, comes as California-headquartered PayPal this month unveiled its own stablecoin – a digital currency pegged 1:1 against fiat currency.
Lucy Ingham, head of content at cross-border payments data and intelligence provider FXC Intelligence, told UKTN that PayPal’s pause wouldn’t be a major setback for its wider crypto plans.
“While the UK is only one of three markets where it currently has a crypto business, it has only ever provided buy, sell and hold services in the UK, whereas in its primary market the US it allows customers to send and make payments in crypto too,” Ingham said.
She added that PayPal launching a stablecoin first in the US demonstrates it is “primarily focused on developing its business there”. However, Ingham said plans to resume crypto purchases in the UK next year “suggests that it remains confident in the long-term potential of the market”.
The UK’s crackdown has drawn some criticism that regulators are “chasing the crypto sector offshore”, but Ingham says that in the long term it will benefit the industry.
“Ultimately while these kinds of regulations can produce short-term pain, they are essential for the long-term health of an industry that has in the past been plagued by fraud, poor conduct and lax consumer protections,” Ingham said.