Blockchain software technology company Consensys has laid off 20% of its workforce amid macroeconomic headwinds and the broader blockchain and cryptocurrency sectors’ struggles with regulatory hurdles.
Consensys CEO Joe Lubin announced the news in a blog post on Tuesday, explaining that the decision to cut the workforce was primarily driven by regulatory uncertainty and broader macroeconomic conditions.
The SEC’s Regulatory Approach Has Affected Industry Jobs: Lubin
While Lubin acknowledged that various economic issues have affected the industry in recent months, he specifically pointed to a lack of clear regulations as a major reason for business woes.
“The lack of clear regulatory frameworks in some markets has made navigating our evolving space unnecessarily complex for innovators, builders, investors, and businesses,” he wrote.
He said the SEC’s cases against crypto and blockchain firms, Consensys included, have hit industry jobs hard. “Multiple cases with the SEC, including ours, represent meaningful jobs and productive investment lost due to the (U.S. Securities and Exchange Commission) SEC’s abuse of power,” he said.
Lubin warned that “such attacks from the U.S. government” will ultimately lead to massive costs for crypto and blockchain companies that were either investigated, sued, or served with Ells Notices.
What Congress Has and Hasn’t Done
Lubin also noted that lawmakers have had a hand in industry struggles over the years. He said “Congress’s inability to rectify the problem” regarding the SEC’s hostile approach toward regulating the sector has contributed to the loss of jobs and investments among crypto firms that have resorted to layoffs.
While this year brought forth some of the most significant proposed bills toward regulatory clarity for the crypto space, movement after the bills’ introductions has been slow.
Earlier this month, House Majority Whip Tom Emmer, R-Minn., said he was optimistic that the stalled Financial Innovation and Technology for the 21st Century Act (FIT21), which is looking to establish a regulatory framework for digital assets, can still be passed this year.
The said proposed legislation was widely praised by the crypto community, but pressure is piling up as the SEC continues to file lawsuits against companies based on existing regulations that the industry said need a revamp to include digital assets and blockchain technology.
Several other crypto-centric bills remain in limbo, even as lawmakers have started calling out the SEC for what they said is regulatory overreach.
Consensys’ Fight for $ETH Clarity
Layoffs at Consensys came months after the blockchain company, which provides software for the Ethereum network, revealed that former head of the SEC’s enforcement division, Gurbir Grewal, had approved an investigation into the ETH token’s status as a security before SEC chief Gary Gensler appeared before a Congress hearing.
The revelation rocked the crypto industry, considering how Gensler refused to clarify Ether’s status as a security or a commodity under oath at the Congress hearing.
Consensys further revealed that it received three subpoenas in 2023 from the regulator, asking for information on its business dealings with the Ethereum blockchain. The company has been demanding clarity, but the Wall Street regulator has yet to specifically confirm the security or commodity status of the world’s second-largest cryptocurrency.
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