R3, a prominent blockchain company in the finance industry, has reportedly laid off one-fifth of its workforce.
The company eliminated positions across different functions and did so to preserve cash during an industry downturn, Bloomberg reported Thursday (Sept. 14).
R3 did not immediately reply to PYMNTS’ request for comment.
The company provided a statement to Bloomberg saying: “After careful consideration of the macroeconomic environment and commercial landscape, we’ve decided to make some changes at R3 to ensure we respond where demand is strongest but also to maintain a strong operating and financial position.”
R3 had said in a Monday (Sept. 11) blog post that it was streamlining operations internally and reducing headcount across various functions, but did not specify the number of jobs being cut.
The post also said that the company was aligning its resources behind core focus areas, continuing to invest in digital currency solutions, and accelerating its work with financial firms on digital assets and tokenization solutions.
“While we are making strides in realizing our mission, we also recognize that the path to this digital transformation will not be a straight line,” R3 said in the post. “Macroeconomic conditions continue to be challenging, and for R3 to remain unwavering in our commitment to digitally transform the financial industry we have had to make difficult yet necessary decisions on our organizational structure.
While R3 has successfully attracted potential new business, particularly in collaborating with central banks on digital currencies, some projects, such as those in insurance and trade finance, have not progressed as expected, resulting in a loss of revenue, according to the Bloomberg report.
Additionally, the slow adoption of blockchain technology among financial institutions has further contributed to the need for restructuring within the company, the report said.
The challenges faced by blockchain startups have been exacerbated by the decline in the cryptocurrency sector, with global investment in digital-asset firms plummeting by 76% in the second quarter compared to the previous year, per the report.
Turning the promise of blockchain into the reality of blockchain is a long, slow process, particularly among companies in regulated financial markets, R3 Senior Advisor Charley Cooper told PYMNTS in an interview posted in August 2022. But it’s happening as clients learn about the technology, he added.