By
Chimamanda U. Martha
April 24th, 2024
Anchorage Digital was the first federally chartered crypto bank in the United States after it raised $350 million at more than $3 billion valuation in 2021.
Anchorage Digital, an institutional-grade cryptocurrency platform, has reportedly sent home 75 employees, representing 20 percent of the total workforce. According to a report by Bloomberg, Anchorage Digital cited the uncertain crypto regulatory landscape in the United States as the top reason for laying off part of its workforce. Moreover, the United States has not formulated clear crypto regulations, with the Securities and Exchange Commission (SEC) still arguing about whether digital assets are security or not.
As an institutional crypto custodian platform, Anchorage Digital is facing regulatory uncertainty, which has significantly contributed to the volume decline in the United States. Furthermore, Coinbase Global Inc (NASDAQ: COIN) reported declining cryptocurrency traded volume in the United States.
Nonetheless, institutional investors have shown tremendous interest in the cryptocurrency market, especially the decentralized financial (DeFi) sector. As such, existing crypto companies have been restructuring their business models to survive the year-long bear market, which has wiped out over 2 trillion from the industry.
“The need for better crypto infrastructure is growing ever clearer,” Anchorage said. “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.”
Notably, Anchorage Digital was the first federally chartered crypto bank in the United States after it raised $350 million at a more than $3 billion valuation in 2021. However, the crypto uncertainty in the United States has pushed the company to lay off employees despite its deep liquidity.
Notably, Anchorage Digital has in the past found itself at loggerheads with the United States regulators for lacking money laundering control measures.
Anchorage Digital and the Crypto Market Outlook
Anchorage Digital has followed similar steps that other crypto companies in the United States, including Coinbase, Kraken, Crypto.com, Gemini Trust, Blockchain.com, and Amber Group, among others, did in the last year. Since the year began, over 2,000 job cuts in the cryptocurrency industry from the United States have been authorized. Interestingly, about 30,000 crypto companies’ workers have lost their jobs since April last year.
The staggering number comes amid a banking crisis in the United States following the collapse of Silvergate Capital, Silicon Valley Bank (SVB), and Signature Bank. While the United States federal government bailed out SVB and Signature bank with $25 billion, economists believe a new wave of interest rate hikes is around the corner.
As a result, the cryptocurrency industry is set to gain more favor from institutional investors and retail traders. Moreover, Bitcoin and Ethereum prices pumped in the past week while banking stocks plunged significantly during the same period.