Anchorage Digital Layoffs Follow Bear Market, NFT Trends
Anchorage Digital is the latest in a long list of cryptocurrency companies to announce strategic layoffs during the extended crypto winter, which is now approaching 18 months long.
The company has parted ways with around 20% of its staff, some 75 people, as the bear market wears on. The layoffs are part of a realignment within the company that has taken several months to complete, and unrelated to recent news banking events, a spokesperson told Blockworks.
The company also cited regulatory uncertainty as a key driver for the refocus.
Anchorage Digital offers institutional clients a range of services, including qualified custody for crypto assets. Among those assets: Non-fungible tokens (NFTs), which have not proven to generate strong demand by the kind of institutional clients the company serves.
A spokesperson told Blockworks that “Our business has seen low institutional demand for certain classes of digital assets, and as a result, Anchorage Digital will reduce focus on them. This includes general demand for NFTs, which means that after a recent NFT feature release we will reduce investment in future institutional functionality.”
Despite lethargic institutional adoption, NFT trading volumes among retail investors have remained relatively strong according to data from DappRadar, with over $2 billion in trading in February 2023.
However, even the biggest players in the industry are reconsidering their approach to the NFT market, including Meta.
Anchorage Digital is also considering a first: Decommissioning custodial support for other low-utilization assets, including Litecoin, as the company “fuels the parts of our business that are most essential to our clients in the current and anticipated marketplace.”
Anchorage Digital Bank unaffected
Anchorage Digital Bank, a subsidiary of Anchorage Digital and the first federally-chartered digital asset-focused bank, is not affected by the layoffs. The spokesperson noted that it remains fully-reserved, does not engage in fractional reserve banking, and that no customer assets have been at risk following the fall of crypto-focused depository institutions Silvergate and Signature Bank.
“Our assets under custody are at an all-time-high, and the demand for regulated crypto banking is only expected to grow further in light of recent proposed regulation by the SEC,” said a spokesperson for Anchorage Digital Bank.
Anchorage Digital Bank itself went on a small hiring spree earlier this year, adding several executives to its staff in January.
Anchorage Digital joins a host of other major cryptocurrency and tech companies in reducing headcount during the extended market downturn. Coinbase, Kraken, OpenSea and Polygon have all laid off staff over the last few months, while major tech companies in the U.S. have reacted to the downturn in macroeconomic conditions by laying off an estimated 100,000 staffers.