PANews reported on August 30 that the Biden administration's regulatory crackdown on cryptocurrencies has led to a major restructuring of a small but high-profile crypto bank. The media learned that Custodia Bank, a Wyoming financial institution that provides banking services to cryptocurrency companies, notified employees on Thursday morning that it would lay off 9 of its 36 employees to preserve capital in its court battle with the U.S. central bank.

The layoffs come as Custodia is embroiled in a legal dispute with the Federal Reserve over so-called master accounts, which allow state-chartered institutions to access the central bank’s liquidity facilities, including payment services. Without a master account, banks are forced to conduct business through other institutions that have master accounts, which often incurs high costs.

Custodia executives blamed the layoffs on what they called the U.S. federal government's "Operation Chokepoint 2.0," as they see it as a coordinated move by the Biden administration to cut off the industry from the broader banking system. "Operation Choke Point 2.0 was a devastating blow to the law-abiding U.S. cryptocurrency industry, and despite Custodia Bank's strong risk management and compliance record, we have been hit hard," said Caitlin Long, founder and CEO of Custodia, in a statement. "We are the right size so that we can maintain operations while preserving capital until Operation Choke Point 2.0 ends or our Federal Reserve lawsuit is successfully concluded." Long did not elaborate on whether the incident would have an impact on the company's profits, but he reiterated that company operations will proceed as usual and that recent developments will not affect Custodia's lawsuit.