This follows his previous statements - posted on Twitter and which have since been deleted - against the Islamic Development Department (Jakim) last month, where he accused the department of "promoting extremism" in the Friday sermons drafted by them.
Paulsen's possible charge was confirmed by another lawyer, Latheefa Koya (left).
He was arrested and remanded by the police on Jan 12 after allegations that his tweet had been insulting Islam.
Inspector-general of police (IGP) Khalid Abu Bakar had also commented that the public should not politicise Paulsen's arrest.
Following the arrest and detention, Communications and Multimedia Minister Ahmad Shabery Cheek proposed for a debate between Paulsen and Jakim over the matter, although this was declined by the latter.
Local NGO Gerakan Hapuskan Akta Hasutan (GHAH) and opposition leader Anwar Ibrahim had condemned the high-handed action, saying that such actions showed the government was paranoid.
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