Circle seeks $1 billion in funding to stabilize USDC

Circle USDC

The fall in the market capitalization of USD Coin and the search for new sources of financing

USD Coin (USDC) market capitalization continues to decline, prompting Circle CEO Jeremy Allaire to seek new sources of funding. According to Allaire, the company needs a “financial pillow” of more than $1 billion.

Amid the declining market cap of USD Coin, Jeremy Allaire, CEO of Circle, is looking for new sources of funding for his company. In an interview with Bloomberg, Allaire revealed that Circle Internet Financial is seeking investments of more than $1 billion. This amount would be enough to compete with other companies and stop the decline in indicators.

The amount of USDC in circulation has decreased from $45 billion at the beginning of the year to $26 billion in August. Allaire cited Binance’s decision to stop supporting the asset and crypto exchanges’ promotion of its own stablecoins as a possible cause for this decline. The USD Coin market cap has fallen to a 2-year low. Data: Coinmarketcap

According to Bloomberg, investors began to lose confidence in stablecoins last year after the market crashed. In March 2023, Circle also temporarily lost access to $3.3 billion worth of deposits held at a now-bankrupt bank.

As a result, USDC temporarily lost its peg to the US dollar.

The USDC stablecoin lost its anchor to the US dollar due to the Silicon Valley Bank collapse in March 2023. Data: Coinmarketcap

“The collapse of the Terra cryptocurrency helped us, and Binance’s policy towards USDC hurt us. The FTX problems also affected us, but after the bankruptcy of several banks, we faced new difficulties” , said the CEO of Circle.

According to Bloomberg, the company earns most of its income in the form of interest from holding assets that back the stablecoin. These assets include dollar deposits and short-term treasury bonds, making the company the beneficiary of rising interest rates.

Circle’s revenue for the first half of 2023 was $779 million, while for all of 2022 it was $772 million. As of the end of June 2023, the company had more than $1 billion in cash on its balance sheet.

The company plans to publish financial reports on a regular basis and has hired Deloitte as an auditor. Allaire speculated that in the long term, many stablecoins will disappear from the market due to increased control by global regulators.

Earlier, the Circle CEO claimed that only 30% of USDC usage is in the United States. In July 2023, it was announced that the company plans to launch stablecoins for Japan, where digital assets have been recognized as a means of payment.