Circle is counting on a $1 billion airbag to compete in the stablecoin market. This was stated by the head of the co-issuer of USD Coin (USDC) Jeremy Allaire Bloomberg.
Since the beginning of the year, the capitalization of the company’s coin has fallen from $44.5 billion to $26.2 billion. The indicator of the main competitor, USDT from Tether, has grown to $83.4 billion.
Data: CoinGecko.
Allaire acknowledged that the decline in market share is partly due to Binance’s decision about a year ago to phase out USDC in favor of its own stablecoin. CEO Circle also noted the factor of “tail risks” of other events.
“The collapse of Terra helped us, but the forced conversion of Binance hurt. The collapse of FTX seemed to have gone positive, but then the failures of regional banks harmed,” Allair said.
Circle generates most of its revenue from interest on USDC collateral such as short-term Treasuries or dollar deposits. For the first half of the year, the company’s revenue was $779 million, while for the whole of 2022 it was $772 million. During the period, the company made a profit of $219 million and ended it with more than $1 billion of cash on the balance sheet.
“This is significantly more than we expected and provides many opportunities for investment, new product creation, revenue streams and profitable international expansion,” Allair said.
In his opinion, competition in the stablecoin market will increase with the entry of an increasing number of new players. The appearance of PYUSD from PayPal is just the beginning, the head of Circle expressed confidence.
Paxos, a blockchain infrastructure company, issued the stablecoin for the payment giant. According to a spokesperson, the firm is working on partnerships with many in the technology and finance industries who are willing to follow PayPal’s lead.
Recall that in the next five years, the capitalization of the stablecoin market will grow from the current $125 billion to $2.8 trillion, according to Bernstein analysts.
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2023-08-11 09:49:21
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