Yep. Everywhere else they are entirely unregulated, and they will definitely want it to stay that way for as long as they can get away with it.
Well, not exactly unregulated, but unless you're specific about what sort of regulations you feel are missing, the rest of this is purely pedantic. It's much more of a clusterfuck than that. For instance, I count 42 states (well, 41 + a District) here. As a former employee of PayPal's AML Compliance department, I can tell you that paypal is regulated (AML/CTF - not consumer protection regulations which is probably what you're bitching about) in the US (FinCEN), Canada (FinTRAC), Australia (AusTRAC), China (HK Police) the EU (CSSF) and anywhere outside of that in Singapore (MAS). A year ago when I left, there was talk of adding legal entities in 4 or 5 other countries, primarily in Asia and Latin America.
To the GP's point about why PayPal is not a bank (in the US anyhow), is that US banks issue credit and US money service businesses merely move money. I would certainly concede that the Bill Me Later unit of PayPal is operates purely on the technicality of the laws and/or regulations that separate banks from MSBs (BML makes a decision on whether to extend credit, then a bank issues the credit with the understanding that BML will buy the debt a few days later). There was often talk of becoming a bank, or at least chartering a subsidiary bank in order to allow the credit issuing to move completely in house. Ebay divesting Skype was supposedly a part of that plan, although I never understood why, nor can I say whether PayPal is any closer to becoming (or more likely starting) a bank. More of what PayPal does falls under the EU's legal definition of a bank, so PayPal is a bank there.