The stablecoin issuer Paxos is laying off 20% of its workforce and will focus on stablecoins and tokenizing real-world assets in the future

he stablecoin issuer Paxos recently laid off approximately 20% of its employees, affecting 65 staff members. This decision reduces Paxos' workforce to between 200 and 300 employees. The move comes despite Paxos holding over $500 million in assets on its balance sheet.

"We made a difficult decision to reduce our workforce by ~20%. We communicated this news directly to all 65 affected team members," wrote Paxos co-founder and CEO Charles Cascarilla in an email to employees on Tuesday.

In the email, Charles Cascarilla stated that Paxos has provided the following support to affected employees:

• 13 weeks of severance pay
• Three months of subsidized health insurance
• Three months of job placement assistance
• Two years extension to exercise vested stock options

Additionally, according to the email, the company also paid out second-quarter bonuses to those participating in the quarterly incentive program. Payment and benefits were provided to anyone approved for parental leave or sick leave, along with an exit package.

Paxos's future strategy focuses on

Charles Cascarilla stated that the layoffs "enable us to best execute on the enormous opportunities in tokenization and stablecoins," and the company is in "a very strong financial position to succeed."

Just a week before the layoffs, Paxos launched a regulated income stablecoin called Lift Dollar (USDL) through its entity Paxos International based in the UAE.

Charles Cascarilla also mentioned that "stablecoins will grow tenfold over the next few years and become a linchpin of an open financial system through tokenization."

Paxos plans to gradually phase out its commodity and securities settlement services, focusing more on tokenizing real-world assets and stablecoins.

#Paxos cuts 20% of staff although its potential remains strong

Mr. Charles Cascarilla, co-founder and CEO of Paxos, explained the decision to cut staff in an email to employees on June 12: “This allows the company to best take advantage of the huge opportunity ahead in… pic.twitter.com/6YFpgTNEci
— BWF Ventures (@BWFVentures) June 13, 2024
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The European Union is strengthening its regulatory measures on stablecoins

In the European Union, the Markets in Crypto-Assets (MiCA) regulation, which will come into effect in 2024, includes comprehensive rules specifically targeting stablecoins. MiCA mandates that stablecoin issuers hold adequate reserves and ensure robust governance for these tokens.

Additionally, the European Banking Authority (EBA) has issued new liquidity guidelines for stablecoin issuers. Under orders from the New York Department of Financial Services (NYDFS), BUSD, issued in collaboration between Paxos and Binance, ceased minting new tokens in February 2023 and was delisted on December 14, 2023. This is part of broader regulatory tightening around stablecoins, impacting their issuance and management practices.

In 2022, the collapse of TerraUSD and the Luna token resulted in investors losing approximately $40 billion. Terraform Labs and its former CEO Do Kwon were fined about $4.5 billion. This incident has also been a significant factor leading to increased regulatory scrutiny of stablecoins.

The prospects for stablecoins and tokenization of real-world assets

Stablecoins, due to their price stability, are suitable for cross-border payments, decentralized finance (DeFi), and other financial services. By reducing transaction costs and time, stablecoins are becoming more widely adopted.

More traditional financial institutions are entering the stablecoin market by issuing their own stablecoins or partnering with cryptocurrency companies. At the same time, global regulatory scrutiny of stablecoins is increasing, which enhances market trustworthiness and transparency.

Tokenization of real-world assets spans across multiple sectors such as real estate, art, commodities, and financial assets. This market has a tremendous scale and has the potential to transform the operations of traditional asset markets. Diversified and innovative market applications are expected to attract more investors, further promoting the development of the cryptocurrency market.