Crypto Stablecoin Publisher Circle Stays Positive amid PayPal’s PYUSD Announcement
In the cryptocurrency market, payment service provider PayPal recently announced its own PYUSD stablecoin, which will directly compete with other major stablecoins like USDC and USDT. This announcement has the potential to shrink the market presence of Circle, the company behind USDC. However, Circle remains optimistic about the situation.
Cycle of Challenges for Circle
Circle CEO Jeremy Allaire suggests in an interview with Bloomberg that the company is simply bound by market conditions. He mentions how the collapse of Terra initially helped them, but the forced USDC conversion on Binance caused harm. The decline of FTX provided some assistance, but later on, issues with regional banks negatively affected them again.
This indicates that Circle is caught in a cycle of challenges. Last year, Binance announced its decision to stop supporting “smaller stablecoins” in favor of its own BUSD stablecoin. As a result, Circle’s USDC was delisted. Additionally, earlier this year, USDC lost its link to the dollar when Silicon Valley Bank (SVB) went bankrupt. Circle had deposited a portion of USDC as collateral with SVB.
Despite concerns that USDC might go to zero, Allaire dismisses this idea. Circle claims to hold more than $1 billion in cash reserves on its balance sheet, similar to Tether, the issuer of USDT.
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In the first half of 2023, Circle already generated revenue of $779 million, surpassing the total revenue of $772 million for the entire year of 2022. The EBITDA figures, standing at $2019 million for the first half of this year, are also higher than the previous year, which was $150 million. Allaire emphasizes that there is no reason to worry and highlights the opportunities to further expand Circle’s influence in the market.
Innovation through PayPal Stablecoin
Allaire also sees PayPal’s move as significant news for the industry. He expects that more financial service providers will enter the stablecoin market, not just internet payment processors. He believes having more competition is beneficial. To be able to compete, Circle plans to form partnerships with other companies, ensuring the growth of USDC amid intense competition.
Despite the prices of many cryptocurrencies still recovering from the deep bear market, Allaire states that the market continues to grow rapidly. He previously mentioned the immense influence of Artificial Intelligence (AI) in the crypto industry, with AI bots creating wallets and automatically trading USDC.