Amid the crisis rocking the United States banking sector, crypto bank Anchorage Digital announced plans to lay-off 20% of its workers on March 14, citing regulatory uncertainty as one of the reasons behind the decision.
The 20 per cent lay-off represents explicitly 75 employees of Anchorage Digital. Although it was not clearly stated if the decision was also influenced by the ongoing unrest in the U.S. banking sector.
Meanwhile, Anchorage described the resolution as “a strategic realignment to better focus our resources,” stressing that the broad macroeconomic challenges coupled with crypto market volatility have necessitated judicious use of resources.
Recall that Anchorage has made its mark as it became the first U.S.-based crypto company to be granted a national trust bank charter by the office of the Comptroller of the Currency in Jan. 2021.
Anchorage clarified that it has no financial challenges but needed to embark on restructuring in line with the current market conditions.
Crypto Banks Struggle for Survival
It is incontrovertibly clear that all is not well with major crypto banks, especially in the United States. In less than a space of two weeks, leading crypto banks Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank folded up.
Consequently, the U.S. Federal Deposit Insurance Corporation (FDIC) has taken proactive measures intending to secure all customer deposits and ensure 100 percent repayment, which commences on Monday, March 13.
@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors' savings remain safe: https://t.co/YISeTdFPrO
— Federal Reserve (@federalreserve) March 12, 2023
It was established that no losses associated with the collapsed banks will be borne by the taxpayer. This is spot on.
More than any other time, the financial condition of Anchorage bank should be dispassionately reviewed and established in order to avert a repeat of what happened to Silicon Valley and Silvergate bank.
In the meantime, crypto-related firms should reckon with the fact that the bear market is still much with us and should endeavour to cut unwise spending accordingly.
It is much safer to re-strategize and cut costs by laying-off workers than collapsing indiscriminately. The latter will not only have negative effects on the customers, but it might lead to the end of the project.