Dive Brief:
- Anchorage Digital is laying off 75 employees, or 20% of its staff, Bloomberg reported Tuesday.
- “The need for better crypto infrastructure is growing ever clearer,” the crypto bank told the wire service said in a statement. “For us, that means focusing resolutely on our status as an unequivocal qualified custodian, among other safe and regulated ways for institutions to participate in the digital asset ecosystem.”
- The move comes during a historic rough patch for the crypto sector in the U.S. as three banks heavily invested in the digital asset class — Silvergate, Silicon Valley Bank, and Signature Bank — have closed.
Dive Insight:
Indeed, Anchorage Digital cited the uncertain crypto regulatory landscape as a factor in its decision, according to Bloomberg.
Anchorage Digital was one of three crypto firms — alongside Paxos and Protego Trust — to receive conditional approval for a trust bank charter from the Office of the Comptroller of the Currency in 2021. But each has seen stumbles over the past year.
Protego, which is still waiting for final approval on its charter, laid off “more than half” of its workforce, CoinDesk reported this month, amid funding issues.
“Money is a problem, though there is a signed deal which has been very slow in funding,” a source told the publication. “Operations, risk management, compliance, data centers/applications etc. are all sitting in a ready to launch state, but until capital comes, Protego is stuck.”
Paxos, meanwhile, sought to clarify last month on Twitter that, contrary to rumor, the OCC had not asked it to withdraw its charter application. The statement came less than a week before the New York Department of Financial Services ordered Paxos to stop issuing new Binance USD stablecoins. Around the same time, the Securities and Exchange Commission told Paxos it plans to sue the company over violations to investor protection laws, according to The Wall Street Journal.
Anchorage Digital in January announced eight executive moves designed to address an April 2022 order from the OCC, demanding that the company overhaul its anti-money laundering program and hire a Bank Secrecy Act officer. Anchorage Digital had failed to implement internal controls for customer due diligence, and needed to better monitor suspicious activity, the OCC said in its order.
“Recent market events have reaffirmed what we have long believed: that security and regulation are key to increasing trust in the crypto economy,” Anchorage Digital CEO Nathan McCauley said in January.
Anchorage Digital is hardly the only company in the crypto space to cut staff this year. Crypto exchange Coinbase and digital-asset brokerage Gemini launched workforce cuts within the first week-and-a-half of 2023.
