Anchorage Digital, a cryptocurrency bank, has announced plans to lay off 75 employees, which constitutes approximately 20% of its workforce. The company cited regulatory uncertainties in the United States as the reason for its decision.
Anchorage stated that the layoffs were part of a strategic realignment aimed at optimizing their resources. They attributed their change in approach to various macroeconomic issues and the unpredictable nature of the cryptocurrency market.
According to Anchorage in a statement:
“The strategic adjustments we are undertaking have been developed over the course of a several months-long review process and are in response to an evolving landscape facing the crypto industry at-large, shaped by regulatory uncertainty in the U.S., broad macroeconomic challenges, and crypto market volatility.”
The crypto bank claimed that market conditions had boosted the demand for its product, resulting in an all-time high in client assets under custody. However, the cryptocurrency sector and Anchorage’s business are still battling challenges from the same macroeconomic, market, and regulatory dynamics.
Anchorage emphasized that the restructuring is intended to prioritize the aspects of our business that are crucial to our clients in the present and foreseeable market—noting that Anchorage Digital would be well-equipped to meet the increasing need for creating regulated digital asset solutions for investors.
In 2021, Anchorage became the first cryptocurrency bank authorized by the U.S. government. It secured $350 million from investors led by private equity firm KKR & Co., valuing the company at over $3 billion.
However, the cryptocurrency bank has faced regulatory disputes with US authorities, including a declaration in April 2021 by the Office of the Comptroller of the Currency that Anchorage’s compliance program was insufficient. The agency cited a lack of adequate staff and internal protocols to authenticate clients, as well as essential anti-money-laundering safeguards.
Anchorage’s planned staff reduction is another loss for the crypto banking industry. In addition to this, the government seized Signature Bank, known for being crypto-friendly, on Sunday due to regulators’ lack of confidence in its management.
Also, the plan follows the trend of layoffs observed in the cryptocurrency sector this year. Crypto companies, including Coinbase, Huobi, Magic Eden, and ByBit, have announced a workforce reduction this year.
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