Circle Implements Minor Workforce Reduction to Maintain Balance Sheet Robustness

Stablecoin issuer Circle announced on Wednesday that the company has implemented a minor workforce reduction and discontinued certain “non-core” activities.

According to a report by Coindesk, a Circle spokesperson mentioned in an email that in order to maintain a strong balance sheet, Circle is doubling down on core business activities and execution. As a result, they have reduced or terminated investments in non-core activities and have made minor reductions in operating expenses, including a slight decrease in personnel.

As the

cryptocurrency

winter sets in, a series of companies, including Circle and Coinbase, have been compelled to scale back their business operations in response to financial pressures. According to Defillama, the supply of the USDC stablecoin issued by Circle has been steadily declining since June 2022, with a contraction of over $28 billion in market capitalization, representing a decrease of more than 50%.

As a stablecoin issuer, Circle offers a USD-anchored stablecoin (USDC) and a EUR-anchored stablecoin (EUROC). Both of these tokens are backed by real cash reserves, issued on the blockchain at a 1:1 ratio, and are redeemable for their respective fiat currencies.

Circle allocates 80% of the USDC reserve funds to 3-month US Treasury bonds, while the remaining 20% is held in cash. Additionally, Circle publishes monthly updates on the issuance of stablecoins and the status of its cash reserves.

According to the information available, Circle has a secure structure for its USDC cash reserves. However, the safety of the reserve funds may be subject to external circumstances under extreme conditions. In a previous incident, the bankruptcy of Silicon Valley Bank was mentioned in Circle's disclosure of reserve breakdown. It was stated that a portion of the cash reserves was held in Silicon Valley Bank, which led to a temporary deviation in the stability of USDC.

Currently, Circle's primary cash reserves come from USDC, with EUROC accounting for a smaller portion. However, Circle has been exploring the introduction of new types of stablecoin-anchored tokens. According to a report by Coindesk, Circle's co-founder and CEO, Jeremy Allaire, stated that considering the stablecoin legislation implemented in Japan on June 1st, Circle is exploring the issuance of stablecoins in Japan. Recently, Circle obtained a Major Payment Institution (MPI) license in Singapore, enabling them to provide digital payment token services, cross-border remittance services, and domestic remittance services in Singapore.