Anchorage Digital, which is the sole federally chartered crypto bank in the United States, has announced that it will reduce its workforce by approximately 20% due to regulatory ambiguity, market turbulence, and macro-economic challenges.
“The strategic adjustments we are undertaking have been developed over the course of a several months-long review process,” the company said, adding it had laid off 75 employees.
While it said that its business was growing, it pointed to the ‘macroeconomic, market, and regulatory dynamics’ that are ‘creating headwinds for our business and the crypto industry.’
“Our clients should experience no disruption in service,” the company said. “We remain optimistic about the digital economy and our place within it.”
In 2021, Anchorage Digital secured $350 million in a Series D funding round which valued the company at $3 billion. The funding was led by KKR, and participated by a bunch of investors that included:
- BlackRock
- Goldman Sachs
- PayPal Ventures
- Andreessen Horowitz
- Alameda Research
- Apollo credit funds
- GIC (Singaporean sovereign wealth fund)
- GoldenTree Asset Management
- Wellington Management
- Thoma Bravo
Anchorage’s decision to cut staff was announced shortly after regulators took control of crypto-friendly banks, Signature Bank and Silicon Valley Bank (SVB), which faced runs on deposits and questions about their solvency.
The two banks were closed in quick succession by the Federal Deposit Insurance Company (FDIC), as SVB became the second largest bank collapse in U.S history after Lehman brothers in 2008 while Signature Bnk was the third.
On the same week, Silvergate Bank announced it was shutting down operations and beginning a liquidation process to recover investor funds. The bank cautioned on the heightened regulatory scrutiny on banks that offer services to clients in the digital asset industry.
Silvergate, along with Signature Bank based in New York, has been one of the two primary banks for crypto companies. While Signature Bank has over $114 billion in assets, Silvergate has just over $11 billion. A major customer of Silvergate was the now-bankrupt crypto exchange, FTX.
However, unlike those banks, Anchorage Digital is federally chartered and regulated by the Office of the Comptroller of the Currency.
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