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Anchorage Digital, a crypto bank, has recently announced plans to lay off 75 employees. This represents a significant 20% of its workforce. The decision was a result of regulatory uncertainty in the United States. It also was as a result of a need for a strategic realignment to better focus resources.
The company pointed towards broad macroeconomic challenges and crypto market volatility as other factors contributing to its shift in strategy.
The decision to lay off staff was reportedly taken after a several months-long review process. The decision follows the US banking turmoil, but it ultimately wasn’t made by it. Anchorage expressed continued confidence in the digital asset landscape and its ability to build regulated solutions for digital asset holders, despite the challenges posed by market conditions and regulatory dynamics. According to Anchorage:
“As part of that commitment, today we are announcing that we will be initiating a strategic realignment to better focus our resources. That process includes the difficult but necessary decision to reduce our headcount. These same macroeconomic, market, and regulatory dynamics are creating headwinds for our business and the crypto industry.”
Regulatory concerns, banking trials, and cryptocurrency struggles
The layoffs come at a time when the cryptocurrency industry is facing increasing headwinds. Due to the ongoing banking crisis in the US, Crypto-friendly Silicon Valley Bank, Silvergate Bank, and Signature Bank have all gone under since March 8, prompting the Federal Deposit Insurance Corporation to guarantee all customer deposits for SVB and Signature. The standard threshold for guarantees is $250,000.
Layoffs are becoming more common in the blockchain and digital currency industry. Cryptocurrency firms are finding it increasingly difficult to access banks due to regulatory uncertainty and a lack of clear guidelines. While some firms are looking to alternative solutions, such as setting up their own banks or seeking out smaller, more specialised banks, others may have to consider reducing their workforce or even shutting down altogether.
The current regulatory environment in the US is putting significant pressure on crypto firms. Crypto companies and blockchain businesses will need to adapt to the changing landscape, it remains to be seen how this happens.