Stablecoin issuer Paxos has announced a significant reduction in its workforce, laying off approximately 20% of its staff despite maintaining a robust financial position with over $500 million on its balance sheet.

In an email to employees on Tuesday, co-founder and CEO Charles 'Chad' Cascarilla shared the difficult decision to cut around 65 jobs. "This move allows us to best execute on the massive opportunity ahead in tokenization and stablecoins," Cascarilla explained. The contents of the email were confirmed by a Paxos spokesperson to The Block.

The company is offering comprehensive severance packages to the affected employees, including 13 weeks of severance pay, three months of subsidized health insurance, three months of outplacement support, and a two-year extension to exercise vested options. Additionally, Paxos is providing second-quarter bonuses for those on quarterly incentive programs and extending payments and benefits to employees on approved parental or medical leave.

With the layoffs, Paxos' employee count now stands between 200 and 300, according to a source with direct knowledge of the matter. This downsizing comes after Paxos was valued at $2.4 billion following a $300 million Series D funding round in 2021.

The workforce reduction coincides with Paxos' recent launch of a regulated yield-bearing stablecoin, Lift Dollar (USDL), from its UAE-based entity, Paxos International. The company is focusing its efforts on regulated stablecoins and tokenization, which Cascarilla believes will significantly grow in the coming years. "Stablecoins will 10x in the coming years and serve as the fulcrum for opening the financial system through tokenization," he stated. "Launching and scaling new regulated tokens takes time. We will continue to consolidate focus on our core offering and de-prioritize adjacencies."

By "de-prioritizing adjacencies," Cascarilla referred to shifting focus away from new products and features that were initially considered but are no longer prioritized, according to a source.

This strategic shift and the accompanying layoffs make Paxos the second major crypto company in recent weeks to reduce staff despite a strong financial footing. Last week, The Block reported that MoonPay laid off 10% of its workforce, or about 30 employees, despite having "years of runway."

Paxos’ decision reflects a broader trend in the cryptocurrency industry, where companies are recalibrating their strategies and resources to navigate the evolving market landscape while maintaining financial prudence.