Circle seeks $1 billion in funding to stabilize USDC
Date: 2023-08-10 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
Circle CEO Jeremy Allaire is looking for new sources of funding for his company amid a decline in the market capitalization of USD Coin (USDC). He announced this in an interview with Bloomberg.
Circle Internet Financial is looking for an investment of more than $1 billion, enough to compete with other companies and stop further declines.
The amount of USDC in circulation dropped from $45 billion at the beginning of the year to $26 billion in August. Among the possible reasons, Allair named Binance's refusal to support the asset and the promotion of its own stablecoin by the crypto exchange.
The market capitalization of USD Coin has fallen to a 2-year low. Data: Coinmarketcap
According to Bloomberg, investors began to lose confidence in stablecoins last year after last year's market crash. In March 2023, Circle also temporarily lost access to $3.3 billion in deposits held at the now-defunct bank.
Because of this, USDC briefly lost parity against the US dollar.
The USDC stablecoin lost its peg to the US dollar amid the collapse of Silicon Valley Bank in March 2023. Data: Coinmarketcap
“The collapse of the Terra cryptocurrency helped us, but Binance’s USDC policy hurt us. FTX problems also supported us, but after the failure of several banks, we faced new difficulties, ”said the head of Circle.
Bloomberg clarified that the company receives most of the income in the form of percentage profits from holding assets that back the stablecoin. We are talking about 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, while for the whole of 2022 it was $772 million. 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 stablecoins will disappear from the market, given the tightening of the control of global regulators.
Earlier, Circle's CEO stated that the US accounts for only 30% of USDC usage. In July 2023, it became known that the company intends to issue stablecoins for Japan, where digital assets are recognized as a means of payment.
