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Crypto bank Anchorage Digital cuts 20% of staff citing regulatory uncertainty

March 15, 2023 Coin Telegraph

Anchorage Digital

It's unclear whether Anchorage Digital’s layoffs relate to the current turmoil in the U.S. banking sector.

Crypto bank Anchorage Digital announced it would be letting go of 75 employees, representing approximately 20% of its workforce, citing regulatory uncertainty in the United States as a factor in its decision.

In a March 14 statement labeled the layoffs as “a strategic realignment to better focus our resources,” and pointed to “broad macroeconomic challenges, and crypto market volatility” as other factors contributing to its shift in strategy.

It said the market conditions had boosted demand for its product and client assets under custody "are at an all-time high," but added:

"These same macroeconomic, market, and regulatory dynamics are creating headwinds for our business and the crypto industry.”

Anchorage — which became the first U.S.-based crypto firm to be granted a national trust bank charter from the Office of the Comptroller of the Currency in January 2021 — expressed continued confidence in the digital asset landscape and its ability to build “regulated solutions for digital asset holders.”

The layoffs come at a time when the banking system in the U.S. is in a state of disarray after three regional banks went under in just one week.

Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank have all gone under since March 8, prompting the Federal Deposit Insurance Corporation (FDIC) to take the extraordinary step of guaranteeing all customer deposits in excess of the standard $250,000 it normally guarantees for SVB and Signature.

@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’s unclear if the recent developments regarding SVB, Signature, and Silvergate contributed to Anchorage’s decision to cut staff.

Anchorage did not immediately respond to Cointelegraph’s request for comment.

Layoffs within the crypto industry have considerably slowed since the beginning of the year after the nearly 3,000 positions cut by crypto firms such as crypto exchanges Coinbase and crypto.com in January were followed by a more muted 570 layoffs for February.

Anchorage co-founder sees ‘tons of opportunity’ as it expands into Asia

October 5, 2022 Coin Telegraph

Anchorage Digital

Anchorage Digital has marked its plans for expansion into the Asian crypto market, with co-founder Diogo Mónica noting that Singapore is just a starting point.

Anchorage Digital co-founder and president Diogo Mónica believe there is immense opportunity in Asia’s institutional investors, with the digital asset infrastructure provider on Oct. 5 announcing a “major expansion” of its platform into the region.

Speaking to Cointelegraph, Mónica said the company chose Singapore as a “jump point” into the wider Asia market as the country has become a hub for crypto companies and has a strong regulatory environment. Anchorage is currently undertaking the application process with the Monetary Authority of Singapore (MAS), the city-state's central bank.

“It’s about being in a regime that’s friendly towards crypto and that businesses want to do business in. We’re institutional only, institutions are going to Singapore, so we're following suit.”

However, Mónica said he sees “tons of opportunity” in the Thai, Indonesian, Japanese and South Korean crypto markets as well, after speaking to regulators there, though he expects the company will need a more local presence.

“Right now our strategy is being regulated in Singapore as it’s recognized by all the other regulators as a great location,” Mónica says, adding other regulators in the region have “very strict, but very clear rules, which is amazing.”

Anchorage provides infrastructure for use by financial institutions to enable digital asset custody, exchange, staking and other Web3-related services.

Mónica said however that Asian institutional investors have changed their tune on how they approached crypto investments after the wake of the Terra ecosystem collapse.

He said it was rarer for Asia-based institutions to care about the security of the assets up until recently, with a tendency of focusing more on product features. However, in the wake of the collapse and the resulting sluggish crypto market, the focus has shifted to regulation, risk management and business continuity.

“I now have conversations about bankruptcy, and whether their assets are bankruptcy remote, and whether they're on your balance sheet […] but a year ago, nobody's asking me questions about bankruptcy. A year ago, everybody was asking me questions about DeFi and things like that.”

Mónica says Anchorage already has a team in Singapore with clients from the region making up roughly 10% of its business. He sees that expanding to 25% over the next 12 to 18 months.

He said the bear market is a good time to gain a foothold and build relationships with regulators as it demonstrates its ability to attract well-established clients who “are not just tourists to the space.”

“You're seen as the leader, and you're seen as the people that expanded and have conviction, even during the bear market.”

The most popular use case for crypto that Mónica is witnessing in the region is cross-border remittances and borrowing and lending. He also mentioned mining is a common use case, not just for Bitcoin (BTC) but also companies running proof-of-stake validators.

As for the future, he says announcements of “some very large traditional firms” using its technology to offer services themselves are on the horizon, along with a focus on stablecoins and the infrastructure component which will serve use cases for those assets.

Bittrex, Merkle Science, Bitgo Join Crypto Market Integrity Coalition

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Anchorage forms custody network with five crypto exchanges

June 10, 2022 Coin Telegraph

Anchorage Digital

The exchange custody network includes Binance.US, CoinList, Blockchain.com, Strix Leviathan and Wintermute.

Crypto custody firm Anchorage Digital has recently formed an exchange custody network with five digital asset trading platforms to segregate institutional client funds from exchanges into regulated asset vaults.

In an announcement, the custodian mentioned that it has partnered with Binance.US, CoinList, Blockchain.com, Strix Leviathan and Wintermute. According to Anchorage, this will provide institutions with direct access to a wide range of trading pairs.

The custody firm also noted that the formation of the custody network allows institutions like Registered Investment Advisors to meet their obligations to their clients in a safe environment by holding assets through a custodian, all throughout the life-cycle of a trade. Additionally, this gives clients some sort of peace of mind, knowing that their assets are not stored in hot wallets, which are prone to hacks.

Diogo Mónica, the co-founder and president of Anchorage, said that this allows the industry to move beyond "hodl." He tweeted:

Announcing @Anchorage’s new custody exchange network.

As the crypto ecosystem has evolved beyond “hodl”–opening new doors of opportunity for investors–institutions deserve to participate as safely and seamlessly as possible.
— Diogo Mónica (@diogomonica) June 9, 2022

Anchorage Digital CEO Nathan McCauley underscored that exchanges and custodians should be different, just as it is for more conventional finance structures. He noted that if the crypto space wants to gain more trust from institutional clients, the industry must "follow the same playbook" as traditional finance.

The formation of the exchange custody network came months after the United States Office of the Comptroller of the Currency (OCC) announced that it intends to pursue cease and desist proceedings against Anchorage for possible violations of anti-money laundering regulations. Back then, the custody firm told Cointelegraph that they are working to reinforce the areas that were identified by the OCC.

Meanwhile, back in December 2021, Anchorage secured $350 million in a funding round led by investment bigwig KKR. With this event, the firm's valuation rose to more than $3 billion. This also marked the first time that the KKR has tried its hands at investing in the cryptocurrency space.

OCC issues order against Anchorage Digital over AML compliance

April 22, 2022 Coin Telegraph

AML

The bank hinted that the OCC’s actions might help establish a regulatory precedent that could encourage other firms in the space to set up federally regulated digital asset banks.

The United States Office of the Comptroller of the Currency, or OCC, has said it intends to pursue cease and desist proceedings against cryptocurrency custody bank Anchorage Digital for violating certain anti-money laundering requirements.

In a Thursday announcement, the OCC said it issued a consent order against Anchorage Digital based on its “failure to adopt and implement a compliance program” in accordance with required Bank Secrecy Act, or BSA, and AML standards. The government bureau said such actions placed Anchorage Digital in violation of its operating agreement with the OCC, established in January 2021.

“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or novel activities,” said Michael Hsu, acting comptroller of the currency. “When institutions fall short, we will take action and hold them accountable to ensure compliance with federal laws and regulations.”

Anchorage neither admits nor denies the comptroller’s findings, but the order reported the bank has “begun corrective action and is committed to taking all necessary and appropriate steps to remedy the deficiencies.” A consent order, by definition, implies two parties — in this case, Anchorage and the OCC — have reached an agreement in principle on moving forward.

In a statement to Cointelegraph, Anchorage Digital said it had “already been working to strengthen the areas identified [by the OCC] and will continue to bolster these areas, reinforcing a new, digital asset standard for internal BSA/AML controls and procedures.” The bank hinted that the OCC’s actions might help establish a regulatory precedent that could encourage other firms in the space to set up federally regulated digital asset banks.

According to the OCC, there is a 15-day deadline to establish a committee for “specific corrective actions” to ensure the bank is in compliance with the AML and BSA requirements, and issue progress reports on the plan as it is executed. In addition, the government bureau ordered Anchorage make a BSA officer available to ensure compliance.

Anchorage was the first crypto firm in the United States to receive a national bank charter from the OCC in January 2021. Since his departure from the government bureau, former Acting Comptroller of the Currency Brian Brooks was briefly the CEO of Binance.US and now the CEO of crypto mining firm Bitfury.