Custodia Bank has reduced its workforce by layoffing 25% of staff, slashing nine jobs amid regulatory pressure. The bank’s CEO, Caitlin Long, cited the Biden administration’s stringent crypto regulations as a major reason for the layoff.
In contrast with Biden’s hawkish crypto regulatory approach, Trump has promised a more favorable environment for crypto in his campaign.
Custodia Cut down 25% Of Employees
According to a Fox Business report, Custodia Bank announced a 25% reduction in staff strength. The move saw the bank cut down nine jobs in its overall 36 work positions.
The bank disclosed that its decision stems from the increasing pressure of the Biden administration’s crackdown on crypto.
Custodia Bank is a financial institution that provides securities services. It also facilitates digital asset payment and custody solutions and offers banking services to crypto entities.
The organization has been at loggerheads with the Federal Reserve as it struggled to secure a master account, a crucial operation requirement.
Usually, the master account offers state-chartered institutions access to the Fed’s liquidity services, such as payment services. So, without a master account, service banks will rely on those with the accounts to complete their transactions, which comes at high costs.
Therefore, Custodia Bank reduced its workforce to cut operational expenses amid its struggle with the Fed. Custodia Bank also cited the intense Biden administration’s crackdown on the crypto industry as one reason for its recent layoffs.
According to the bank’s CEO, Caitlin Long, the US government is using a regulatory approach against the crypto space, which the industry dubbed “Operation Chokepoint 2.0.”
Long claimed this technique aims to sever crypto businesses and entities from the traditional banking system.
The CEO stated: “Operation Choke Point 2.0 has been devastating for the law-abiding US crypto industry, and Custodia Bank has been hit hard despite our strong risk management and compliance track record.”
However, the executive reassured the public that Custodia Bank would maintain normal operations. She also noted that the recent staff layoffs won’t hamper its legal case with the Federal Reserve.
Biden’s Administration Tighten Crypto Regulation While Trump Maintains a Pro-Crypto Stance
The US crypto environment has witnessed stringent regulatory measures under Biden’s administration.
Federal agencies, including the Federal Reserve, tightened regulatory approaches on crypto-related entities. The Feds frown on collaborations between traditional banks and crypto companies, highlighting the highly volatile nature of cryptocurrencies.
The overall regulatory trend has impacted crypto-friendly financial institutions such as Custodia Bank. Most resort to several strategies like layoffs to continue operations.
Meanwhile, former US president Donald Trump has adopted a pro-crypto stance in his recent presidential campaign. Trump has shown outstanding commitment to crypto as he interacts with prominent crypto personalities, pledging to promote a crypto-friendly environment if he becomes president.
JUST IN: Yahoo Finance discusses Donald Trump speaking at the #Bitcoin 2024 Conference in Nashville.
“He’s sees a good opportunity, and Bitcoin is the greatest opportunity for this country.” 🇺🇸 pic.twitter.com/OS69Sd1N9c
— Bitcoin Magazine (@BitcoinMagazine) July 16, 2024
Also, Eric Trump, Donald Trump’s son, has made a significant feat in crypto by launching a new crypto project: World Liberty Financial. The latest development offers financial services in the digital space, such as loans, which operate with DeFi principles.
Excited to announce the launch of @WorldLibertyFi! A new era in finance is here. #Crypto #DeFi 🇺🇸🇺🇸🇺🇸
— Eric Trump (@EricTrump) August 28, 2024
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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