regulatory uncertainty

Crypto Bank Anchorage Cuts 20% of Workforce

Anchorage Digital, a crypto bank that received a national trust bank charter from the Office of the Comptroller of the Currency in January 2021, has announced that it will lay off 75 employees, or approximately 20% of its workforce. The company cited regulatory uncertainty in the United States, as well as macroeconomic challenges and crypto market volatility, as reasons for the layoffs. Despite these challenges, Anchorage expressed continued confidence in the digital asset landscape and its ability to build regulated solutions for digital asset holders.

Anchorage’s decision to cut staff comes at a time when the U.S. banking system is facing significant challenges. Three regional banks, Silicon Valley Bank, Silvergate Bank, and Signature Bank, have gone under since March 8, prompting the Federal Deposit Insurance Corporation to guarantee all customer deposits for SVB and Signature, despite its standard threshold for guarantees being $250,000. It is unclear if these developments contributed to Anchorage’s decision to lay off staff.

The crypto industry has seen a slowdown in layoffs since the beginning of the year. In January, crypto firms such as Coinbase and Crypto.com cut nearly 3,000 positions, while February saw a more muted 570 layoffs. Despite the challenges facing the industry, many firms remain optimistic about the future of digital assets and blockchain technology.

Anchorage Digital was founded in 2017 by Diogo Monica and Nathan McCauley. The company provides custody services for institutional investors, allowing them to securely store their digital assets. In addition to its national trust bank charter, Anchorage has also received approval from the South Dakota Division of Banking to create a digital asset bank. The company’s investors include Blockchain Capital, Lux Capital, and Visa. Anchorage has raised over $137 million in funding to date.

While the layoffs at Anchorage are unfortunate for the affected employees, they may be necessary for the company to weather the current regulatory and market challenges. As the crypto industry continues to mature and attract more institutional investors, firms like Anchorage will play a critical role in providing secure and regulated custody services for digital assets.

Rollbit Shuts Down Degen EXchange and Rollbot.com Amid Regulatory Concerns

Key Takeaways

Rollbit announces the closure of Degen EXchange and sister site Rollbot.com.

The decision is attributed to “regulatory uncertainty and low adoption.”

$RLB functionality remains unaffected; the core product and NFT collections will continue.

Regulatory Hurdles and Low Adoption Force Closure

In an announcement made on September 22, 2023, Rollbit, a cryptocurrency trading platform, revealed that it is discontinuing its Degen EXchange due to “regulatory uncertainty and low adoption.” The company also stated that its sister site, Rollbot.com, is being decommissioned and will now be withdrawal-only with limited functionality for existing accounts.

No Impact on Core Products

Despite these changes, Rollbit clarified that there will be “no changes to our core product, Rollbit.com, $RLB or our NFT collections.” The $RLB token can still be bought and sold as before. The company emphasized that these are independent decisions aimed at “better positioning and safeguarding” their business.

Future Developments

Rollbit also teased its next round of releases, stating they are “going to be very exciting” but did not provide further details. The company reassured its user base that despite the discontinuation of certain services, the core functionalities and future plans remain intact.

Industry Implications

The closure of Degen EXchange adds to the growing list of crypto platforms that have faced regulatory scrutiny. Regulatory bodies around the world have been tightening their grip on cryptocurrency exchanges, often citing concerns about money laundering and consumer protection.

Coinbase Calls for Judicial Intervention on SEC's Inaction

Coinbase’s Chief Legal Officer, Paul Grewal, has taken a step towards resolving the ongoing regulatory ambiguity surrounding digital assets. On October 13, 2023, Grewal filed a formal response with the U.S. Court of Appeals for the Third Circuit, urging the court to issue a mandamus order. This legal move seeks to compel the Securities and Exchange Commission (SEC) to act on Coinbase’s rulemaking petition within a span of 30 days. The move underscores the growing impatience and concern within Coinbase and the broader digital asset community towards the SEC’s perceived bureaucratic dalliance in clarifying the application of securities laws to digital assets.

Since July 2022, when Coinbase initiated its petition for rulemaking, there has been a conspicuous absence of action from the SEC in providing clear directives on how securities laws apply to digital assets. Despite facing an enforcement action under these same laws, the SEC has not shown a willingness to expedite the clarification process. The regulatory body’s recent update on October 11, 2023, merely shared a staff-level recommendation to the Commission regarding Coinbase’s petition without a formal commitment to action.

Paul Grewal and Coinbase have criticized the SEC’s lack of transparency and evasiveness, terming it a “bureaucratic pantomime.” The digital asset industry remains entrapped in a regulatory Catch-22 owing to the SEC’s demand for registration from digital asset firms without availing clear guidelines on the registration process. Furthermore, the contradictory statements emanating from the SEC alongside its aggressive enforcement actions further convolute the regulatory landscape.

Recent developments have only served to underline the SEC’s apparent resistance towards initiating new rulemaking. The SEC Chair reemphasized the sufficiency of existing laws and rules for digital assets, while a noticeable surge in enforcement actions against digital asset firms, including novel actions against non-fungible token (NFT) issuers, has been observed. These actions presuppose the adequacy of existing rules, a notion that stands at odds with the premise of Coinbase’s petition for new rulemaking.

With the regulatory ambiguity continuing to cast a long shadow over the digital asset industry, Grewal argues that a mandamus order is warranted to hold the SEC accountable and to propel it into action. He emphasizes that clear guidelines are quintessential to ensuring legal compliance, nurturing industry growth, and eradicating the ongoing Catch-22 scenario that the industry finds itself ensnared in. The call for a mandamus order is seen as a necessary judicial intervention to end the SEC’s prolonged inaction, and to foster a conducive regulatory environment for digital asset firms.