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

March 15, 2023 Coin Telegraph

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.

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US Regulators and the Fed Jointly Issue Crypto Warnings

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Approach with caution: US banking regulator’s crypto warning

December 9, 2022 Coin Telegraph

Banking

The Office of the Comptroller of the Currency (OCC) said the digital asset industry was maturing but was “not yet robust” in its risk management.

A United States banking industry regulator warned banks of the “emerging risks” of cryptocurrencies saying the sector should take a “cautious approach” and seek permission in some cases when engaging with crypto or crypto firms.

Citing “dislocations” in the crypto market over 2022 the Office of the Comptroller of the Currency (OCC) highlighted what it said were “several key risks” of crypto in its Dec. 8 Semiannual Risk Perspective for Fall 2022 report.

Its three main concerns are that “stablecoins may be unstable,” the crypto industry lacks mature risk management practices and has a high risk of contagion due to the “high degree of interconnectedness.”

Check it out! The @USOCC reported the key issues facing the federal banking system in its Semiannual Risk Perspective for Fall 2022. Read more at https://t.co/CcfoiQM8xe pic.twitter.com/0WnAt5psXU
— OCC (@USOCC) December 8, 2022

The space’s lack of “consistent or comprehensive regulation” and the volatility of crypto along with the increased range of firms offering “bank-like products and services” using crypto and tokenized assets were also cited as concerns, which the OCC believes raises questions regarding financial stability.

The depeg and collapse of the TerraClassicUSD (USTC) algorithmic stablecoin in May was given as an example of stablecoins’ “run risk,” and how asset-backed stablecoins also saw minor depeg events as a result.

It highlighted stablecoin backings have “incrementally evolved” since, but believes most “remain susceptible to run risk.”

Discussing risk management the OCC said practices at crypto firms were maturing but are “not yet robust” with firms appearing “unprepared for the stresses and surprises” over the past year that saw losses for millions of investors, it added:

“Hacks and outages are frequent, and fraud and scams remain high throughout the industry. In some cases, ownership rights, custody arrangements, and financial representations have created a high degree of confusion.”

The crypto market over 2022 also revealed the industry’s “interconnectedness [...] through a variety of opaque lending and investing arrangements” according to the OCC.

It remarked crypto participants “may be engaging in highly leveraged trading” which resulted in the noted contagion risk.

In its advice to banks, the OCC said institutions considering engaging with crypto or crypto companies “should take a careful and incremental approach.”

The OCC advised national banks that crypto-related plans should be discussed “with their supervisory office” before they engage in any activities as some potentially require permission.

Crypto companies have moved to improve transparency in the wake of the bankruptcy of FTX with many exchanges introducing proof-of-reserves so users can verify crypto backings along with some conducting public third-party audits.

OCC makes its staff available for fintech-related discussions

November 4, 2022 Coin Telegraph

Coin Telegraph

The announcement of one-on-one discussions with the OCC followed the department saying it planned to establish an Office of Financial Technology starting in 2023.

The United States Office of the Comptroller of the Currency, or OCC, has announced its representatives will be available on a one-to-one basis to discuss financial technology.

In a Nov. 3 announcement, the OCC said entities considering fintech products and services, partnerships with banks, or concerns “related to responsible innovation in financial services” have the opportunity for one-hour meetings with its staff between Dec. 14-15. The government office said it will screen requests and proposed topics of discussions and announce virtual meeting times.

The OCC announcement followed the department saying it planned to establish an Office of Financial Technology starting in 2023 in an effort to gain a “deep understanding of financial technology and the financial technology landscape.” The request form for the OCC office hours offered the opportunity for a “candid discussion,” suggesting that a transcript or other details will likely not be available to the public.

The @USOCC announced it will host virtual Innovation office hours on Dec. 14-15 to promote responsible innovation in the federal #banking system. One-on-one meeting requests must be submitted by Nov. 18. https://t.co/6G78KV6K0P pic.twitter.com/lBroXemL6U
— OCC (@USOCC) November 4, 2022

In announcing its Office of Financial Technology, the OCC said the proposed office hours will be one of five methods businesses and individuals have to connect with the government department directly. The OCC arm also announced listening sessions, fintech symposiums, participation in financial and banking conferences, and public speeches.

The OCC seems to be stretching its regulatory ambitions in its authority over fintech firms. In 2021, the office pushed back against efforts from the Consumer Financial Protection Bureau to charter non-depository fintech firms. Acting OCC head Michael Hsu has also called for regulatory standards on stablecoins while the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission have clashed while handling regulation and enforcement cases involving digital assets.

Regulators are ‘spending too much time’ on crypto: Comptroller

October 14, 2022 Coin Telegraph

Coin Telegraph

Michael Hsu stated that it is starting to worry him that “we’re not spending that time and attention on some other things," like fintech, which he described as the “future.”

United States Acting Comptroller of the Currency (OCC) Michael Hsu has expressed concerns that regulators are spending “too much time on crypto," rather than more pressing issues, such as technology and banking.

The crypto skeptic OCC head made the comments during an interview with Reuters on Oct. 13, as he outlined a worry that crypto is “occupying a lot of brain space for an awful lot of people” in the regulatory community.

Hsu has been at the helm of the OCC since May 2021 and serves as the administrator for the federal banking system and chief economic officer of the OCC.

During his tenure, has called for greater supervision of crypto firms and standards around stablecoins, while also stressing the need for a cautious approach to crypto regulation due to “red flags” with the sector’s rapid growth.

"We're spending too much time on crypto," he told Reuters, adding that "it's interesting, it has thorny issues... but relative to other technology and banking issues, I think we're now kind of overweight crypto."

Hsu went on to explain that there are other areas that need to be focused on at present, specifically relating to fintech, something which he emphasized last month required immediate oversight to avoid a “severe problem or crisis” due to the sector’s rampant expansion, adding:

"The persistence of the occupation of brain space, it’s starting to worry me now that we’re not spending that time and attention on some other things."

The OCC head said he thinks fintech is the future, and therefore it needs proper time and considerations to help the sector thrive sustainably.

"This is the future, so let's do the future right," he said.

These sentiments are in stark contrast to Hsu’s views on crypto, given that he described the sector as “an immature industry based on an immature technology,” during a lecture at a Harvard Law School roundtable on Oct. 11.

Hsu also outlined concerns with the crypto sector's apparent fear of missing out (FOMO) syndrome which he argued fosters wild speculation as opposed to innovation.

“Promises of innovation and inclusion often mask crypto’s promotion of a gold rush vibe that exploits people’s fear of missing out on the next Google or Amazon.”

“My skepticism of crypto stems from a frustration that the most promising innovations have been crowded out by hype and a fixation on trading,” Hsu added.

OCC