After raising $350 million at a more than $3 billion valuation in 2021, Anchorage Digital became the first cryptocurrency bank in the United States to be licensed under federal law.
According to recent reports, Anchorage Digital, which operates as an institutional-grade bitcoin platform, has let go of 75 employees, accounting for twenty percent of the workforce.
According to a story published by Bloomberg (1), Anchorage Digital highlighted the uncertain regulatory landscape surrounding cryptocurrencies in the United States as the primary reason for cutting off some of its personnel.
In addition, the United States has not established clear crypto rules, and the Securities and Exchange Commission (SEC) is still debating whether or not digital assets qualify as securities.
Anchorage Digital, which operates as an enterprise cryptocurrency custodian platform, is dealing with regulatory uncertainty, which has greatly contributed to the fall in volume in the United States.
In addition, Coinbase Global Inc indicated that the volume of cryptocurrencies exchanged in the United States has declined.
Yet, investment banks, notably the decentralized financial (DeFi) sector, have demonstrated enormous interest in the cryptocurrency market.
As a result, existing crypto businesses have been reorganizing their business strategies in an effort to survive the bear market that has lasted for an entire year and has caused the industry to lose over 2 trillion dollars.
Anchorage stated that it is becoming increasingly obvious that a better cryptographic architecture is required.
“It means for us to focus unwaveringly on our role as an unequivocally qualified custodian, in addition to other secure and controlled ways for institutions to engage in the ecosystem of digital assets,”
After successfully raising 350 million dollars at a valuation of more than 3 billion dollars in 2021, Anchorage Digital became the first crypto bank in the United States to be granted a federal charter.
Despite having significant cash on hand, the company was forced to let go of staff due to the unpredictability surrounding cryptocurrencies in the United States.
Significantly, in the past, Anchorage Digital has been in conflict with the authorities in charge of regulating financial institutions in the United States because it did not have adequate anti-money laundering controls.
The Future of Anchorage Digital and the Cryptocurrency Market
In the past year, several other cryptocurrency companies in the United States have taken actions that are very similar to those taken by Anchorage Digital.
Since the beginning of the year, employers in the United States’ bitcoin industry have been permitted to eliminate approximately 2,000 jobs. It’s interesting to note that since April of last year, around 30,000 workers in crypto enterprises have lost their jobs.
Following the failure of Silvergate Capital, Silicon Valley Bank (SVB), and Signature Bank, the United States is currently experiencing a severe banking crisis.
The astonishing statistic comes as a result of this catastrophe. When the US federal government bailed out SVB and Signature bank with $25 billion, economists thought that a fresh wave of interest rate hikes was just around the corner.
As a direct consequence of this development, the cryptocurrency business will likely win the favor of many institutional investors and retail traders.
In addition, Bitcoin and Ethereum skyrocketed over the past week, whilst the value of banking equities fell dramatically during the same period.