PayPal just paused its plan to release a stablecoin after reports its partner is under investigation amid a larger crypto crackdown

The digital payments giant PayPal is reportedly pausing work on its stablecoin following news that its partner in the effort is under investigation by a New York regulatory agency.

PayPal, which just released its fourth quarter earnings for 2022 on Thursday, was set to debut its stablecoin in the next few weeks, but is no longer going through with the release, Bloomberg reported. The payment provider’s decision comes after Paxos, a stablecoin developer that has previously partnered with Binance and Mastercard, was reported on Thursday by CoinDesk to be in the crosshairs of the New York Department of Financial Services, a niche branch of state government and a key player among U.S. cryptocurrency regulators. Reasons for the investigation were unclear.

When asked for comment, a spokesperson for PayPay told Fortune that the company was “exploring a stablecoin.”

“If and when we seek to move forward, we will, of course, work closely with relevant regulators,” the spokesperson said.

A spokesperson for Paxos did not immediately respond to Fortune’s request for comment. A spokesperson for the Department of Financial Services declined to comment on ongoing investigations.

A pause on PayPal’s stablecoin development follows a suite of recent regulatory action against crypto companies. That acceleration prompted it to stand back from pursuing its own coin, according to an anonymous source who spoke to Bloomberg.

On Thursday, the Securities and Exchange Commission announced that Kraken, the third largest cryptocurrency exchange by trading volume, agreed to a $30 million fine after the government accused the exchange of selling unregistered securities through its staking business, which lets users put their cryptocurrency in escrow to help validate blockchain transactions. In exchange, token holders receive a certain percentage yield. As part of the settlement, Kraken also agreed to remove its staking feature from its platform in the U.S.

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And in late January, Custodia, a crypto-focused bank in Wyoming, was denied membership in the Federal Reserve System, which would have let the bank make use of tax benefits, investment opportunities, and other conveniences.

PayPal has made a concerted push into crypto in the past two years, allowing users to buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin through its digital wallet. In January of 2022, it announced its plans to explore the development of its own stablecoin. This was before crypto behemoths like Celsius, Voyager, and most infamously FTX collapsed and went bankrupt in the following months.

On Thursday, PayPal CEO Dan Schulman, who presided over the company as it made its splash into crypto, announced his plans to retire at the end of 2023.

This story was originally featured on Fortune.com

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