Crypto Bank Anchorage Digital Cites Regulatory Uncertainty for Layoffs
Anchorage Digital, a leading crypto bank, recently announced that it would let go of 75 employees, representing roughly 20% of its workforce.
The bank cites regulatory uncertainty in the United States as one of the factors contributing to its decision to let go of staff. In a statement released on March 14, Anchorage Digital explained that the layoffs were part of a “strategic realignment to better focus our resources” and that the move was also prompted by “broad macroeconomic challenges and crypto market volatility.”
Market conditions had driven demand for Anchorage’s services. The bank had seen a record high in client assets under custody. However, the same factors driving growth in the crypto industry were also creating headwinds for Anchorage’s business and the industry as a whole.
The recent developments in the banking sector in the United States have created additional uncertainty for Anchorage Digital and other crypto firms. Three regional banks, Silicon Valley Bank, Silvergate Bank, and Signature Bank, have failed since March 8.
The Federal Deposit Insurance Corporation has taken the extraordinary step of guaranteeing all customer deposits for SVB and Signature. In contrast, its standard threshold for guarantees is $250,000.
Anchorage Digital continues to have confidence in the digital asset landscape
Despite these challenges, Anchorage Digital remains optimistic about the future of the digital asset landscape. The bank was the first U.S.-based crypto firm to be granted a national trust bank charter from the Office of the Comptroller of the Currency in January 2021. In its statement, Anchorage expressed confidence in its ability to build “regulated solutions for digital asset holders.”
The layoffs come when the crypto industry has been experiencing a slowdown in job cuts. After crypto exchanges Coinbase and Crypto.com cut nearly 3,000 positions in January, there were only 570 layoffs in February. The recent layoffs at Anchorage Digital may signal a renewed wave of downsizing within the industry.
Uncertainty in the regulatory environment
Regulatory uncertainty has long been a concern for the crypto industry, particularly in the United States. The lack of clear guidance from regulators has made it difficult for crypto firms to navigate the regulatory environment and plan for the future.
The recent layoffs at Anchorage Digital underscore crypto banks and other firms’ challenges in this uncertain regulatory landscape.
It remains to be seen how the regulatory environment will evolve in the coming months and years. Some experts predict that increased regulatory scrutiny could benefit the industry in the long run, as it could help weed out bad actors and promote the development of more robust and trustworthy crypto firms. Others worry that excessive regulation could stifle innovation and hinder the industry’s growth.