It's on hold, and it's most likely still happening. No one knows if it'll be a part of the Marvel Cinematic Universe. It'd be totally like Sony to play "leap frog" with the MCU and place this film within their defunct Amazing Spider-Man series, while they're riding high on another Spider-Man with Marvel Studios.
If the MCU doesn't fasttrack its superpowered supervillain numbers, then no, this movie couldn't possibly be a part of that universe. It's totally indicative of Sony's "vision for Spider-Man" that they completely failed to achieve their goals for the ASM series and are now leaving that series high-n-dry and on a big cliffhanger; but honestly, I don't care for that series much.
They're recasting Spider-Man; it's obvious that this film series is over.