PayPal halts UK Crypto sales until 2024 amid regulation shake-up

PayPal will pause all UK customer crypto sales through its platform from October in response to new rules on crypto promotions.

The Financial Conduct Authority will later this year implement tougher rules on how crypto assets are advertised to UK consumers.

The new rules will, among other restrictions, require crypto firms to publish risk warnings alongside advertising and cease offering ‘refer a friend’ bonuses.

In an email sent to customers, the fintech company said it will ‘temporarily pause’ the ability for customers to buy crypto on its platform from 1 October as it works to satisfy the new regulations, which come into effect on 8 October

‘PayPal consistently works closely with regulators around the world to adhere to applicable rules and regulations in the markets in which we operate,’ it told customers.

It added that customers could hold and sell their crypto ‘at any time’.

In May, MPs called for the government to regulate trading in cryptocurrencies in the same way as gambling, amid concerns it poses significant risks to consumers.

When the FCA announced its crypto marketing shake-up in June, its executive director of consumers and competition Sheldon Mills said: ‘It is up to people to decide whether they buy crypto.

‘But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.

‘Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.

‘The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.’

Calls for better regulation are also growing worldwide as consumers, regulators and governments grapple with scam activity and the use of crypto by criminal organisations operating undetected. 

The collapse of several crypto firms including FTX last year has also left amateur investors nursing large losses.

Sam Bankman-Fried, stepped down as head of FTX last November after withdrawals left it short of cash, leading to bankruptcy.

Allegations swirled that he ran it as a ‘personal fiefdom’ while spending £250million on property.

Around 1million creditors face losses of billions of pounds, among them an estimated 80,000 Britons.

After token prices slumped dramatically last year, the price of top cryptocurrency bitcoin has gradually recovered, up around 76 per cent so far this year. However, its price is at less than half of the all-time high reached in November 2021.

Earlier this month, PayPal’s shares got a boost, when it launched a stablecoin, becoming the first major financial technology firm to embrace digital currencies for payments and transfers.

The California-based company launched, PayPal USD, which is issued by Paxos Trust Company and is a cryptocurrency that unlike bitcoin is tied to a fiat currency, the U.S dollar.

The group also said that the digital currency will first only be made available for U.S-based PayPal customers, with the exception of Hawaii and would be redeemable one-to-one for US dollars.