- The market capitalization of USD Coin continues to decline.
- Circle CEO Jeremy Allaire is looking for new sources of funding.
- Allaire believes the company needs a “cash cushion” of more than $1 billion.
Circle CEO Jeremy Allaire is looking for new sources of funding for his company amid the declining market capitalization of USD Coin (USDC). He said this in an interview with Bloomberg.
Circle Internet Financial expects to invest more than $1 billion in the project. That amount would be enough to compete with other companies and stop further declines.
The number of USDCs outstanding fell from $45 billion at the start of the year to $26 billion in August. Allaire cited Binance’s withdrawal of support for the asset and the cryptocurrency exchange’s promotion of its own stablecoin among the possible reasons.
The market capitalization of USD Coin has fallen to a 2-year low. Data: Coinmarketcap
According to Bloomberg, investors began losing confidence in stablecoins last year after last year’s market crash. Circle also temporarily lost access to $3.3 billion in deposits held at the now bankrupt bank in March 2023
The USDC briefly lost parity to the U.S. dollar because of this.
The USDC stablecoin lost its peg to the U.S. dollar amid the collapse of Silicon Valley Bank in March 2023. Data: Coinmarketcap
“The Terra cryptocurrency crash helped us, and Binance’s USDC policy hurt us. FTX’s problems also supported us, but after several bank failures, we faced new challenges,” said Circle’s chief executive.
Bloomberg clarified that the company derives most of its revenue in the form of interest income from holding the assets that provide the stablecoins. These are dollar deposits and short-term Treasury bonds, making the firm a beneficiary of rising interest rates.
Circle’s revenue in the first half of 2023 reached $779 million, compared with $772 million for the full year 2022. As of June 2023, the company has more than $1 billion in cash on its balance sheet.
The company plans to publish financial statements on an ongoing basis and has hired Deloitte as its auditor. Allaire suggested that in the long term, many steiblcoins will disappear from the market, given the tightening scrutiny of global regulators.
Circle’s CEO previously said the U.S. accounts for only 30% of USDC usage. In July 2023, it was revealed that the company intends to issue steblecoins for Japan, where digital assets have been recognized as a means of payment.
It was also revealed that the company is looking to issue steblecoins for Japan, where digital assets have been recognized as a means of payment.