The Circle Internet Financial crypto company hopes that its $1 billion cash reserve will allow it to withstand the process of competition from so-called non-crypto firms like PayPal Holdings.
The main activity of Circle is stablecoins. PayPal, which the company perceives as a competitor, released a stablecoin pegged to the US dollar this week.
Circle CEO Jeremy Allaire said that the amount of cash on the firm’s balance sheet exceeds initial expectations. According to him, a solid financial reserve allows the company to prepare well for investment activities, expanding its product line and implementing global expansion.
This week, the firm presented the platform Wallets as a Service. This offer of the company allows developers to integrate Web3 wallets into their applications.
The number of Circle coins in US dollars currently in circulation decreased from $45 billion to about $26 billion in early 2023.
The company’s revenue for the first six months of this year was fixed at $779 million. For the whole of 2022, this figure amounted to $772 million. The adjusted profit of the company in the first half of the year before interest, taxes, and depreciation (EBITDA) is equal to $219 million. For the whole of last year, this figure amounted to $50 million.
The turmoil in the field of cryptocurrencies has had an ambiguous impact on the company. Jeremy Allaire stated that the collapse of Terra was a positive impact factor. At the same time, Binance’s forced conversion had negative consequences for the firm. The collapse of FTX, according to Jeremy Allaire, in some ways became useful for the company. At the same time, the CEO of the firm said that the bankruptcy of regional banks was a negative influence factor.
Circle has taken the step of hiring Deloitte as an auditor and plans to share financial reports on an ongoing basis. Jeremy Allaire stated that the company will not provide white-label solutions, a practice in which firms issue stablecoins under the name of a partner.
The Federal Reserve has published guidelines for banks regarding the activities of financial institutions related to digital assets. This guide includes any issue of stablecoins. Also, the House Committee on Financial Services has put forward a bill to regulate this digital currency. In Europe, issuers of stablecoins have been ordered to start preparing for the EU rules of 2024.
Jeremy Allaire says that companies and organizations that do not meet the standards of financial integrity, operating standards, and risk management criteria will not be able to work. He also expressed confidence that those market players who do not comply with the regulatory framework will be forced out of the market within the next two years.
As we have reported earlier, Barclays to Buy Stake in a Crypto Company.
