Introduction

New York-based blockchain company, R3, has reduced its workforce by more than 20% as a cost-saving measure due to lower-than-expected adoption rates in the financial sector.

Challenges in Financial Sector

Bloomberg reported that although the R3 project saw potential with central banks, other projects did not achieve the expected performance, which affected their revenues.

Industry Impact

Scope of Downsizing

Although exact numbers were not provided, anonymous sources indicate that this downsizing will affect multiple departments.

Disappointing Performance in Specific Areas

While R3 has received interest from central banks for digital currency projects, some areas such as trade finance and insurance have not met expectations, impacting the company’s revenues.

Funding and Market Trends

In May 2017, R3 secured $107 million in funding from more than 40 institutions, including major players such as Barclays, UBS, and Wells Fargo. At the time, this was one of the largest fundraising events for a blockchain startup.

Recent data from PitchBook shows a 76% decline in funding for digital asset companies in the second quarter of 2023 compared to the same period last year. As a result, many cryptocurrency companies are tightening their balance sheets.

Industry-wide Layoffs

Over the past year, many companies have laid off their employees. Crypto.com, a cryptocurrency exchange, laid off 50% of its staff, while CoinDesk, a major cryptocurrency media platform, laid off 40% of its editorial team. Binance has also seen several senior executives from different regions resign due to regulatory pressures. CoinSwitch, a cryptocurrency exchange in India, recently fired its customer support team.

Broader Impact

This trend is not limited to the cryptocurrency and blockchain sector. Google recently announced layoffs in its recruiting department.