The announcements came fast. Algorand cut 25% of staff. Gemini let go of 30%. Crypto.com trimmed 12%. Block, Jack Dorsey’s payments company, announced it was eliminating roughly 4,000 roles — more than 40% of its workforce. And in nearly every press release, the same phrase appeared: AI efficiency.
Dorsey was direct about it. “A significantly smaller team, using the tools we’re building, can do more and do it better,” he wrote. The message was clear: artificial intelligence was doing the work humans used to do, and the humans were no longer needed.
That explanation is clean, simple, and largely wrong.
The numbers behind the narrative
More than 450 jobs across the crypto sector were cut in a matter of weeks in early 2026. The companies affected were not struggling startups. Block, Gemini, Algorand, Crypto.com, Messari, OP Labs and PIP Labs are among the most established names in the industry. The scale and speed of the cuts prompted widespread coverage, and most of it focused on the AI angle.
But recruiters and industry analysts who track crypto hiring tell a different story. Dan Eskow, a recruiter who specialises in blockchain and Web3 roles, was blunt: “I see no real indication that these layoffs have anything to do with AI workforce replacement at scale.”
His view is backed by data. Crypto job postings are down roughly 80% year over year. That is not a figure consistent with healthy companies trimming headcount because AI has taken over tasks. It is a figure consistent with an industry going through a fundamental contraction.
Whole sectors have disappeared
The most telling detail in the layoff wave is not the number of people let go. It is which roles are disappearing. Entire categories of crypto work that existed two years ago have effectively vanished.
Layer 2 infrastructure teams are being cut because the developer activity that was supposed to justify those networks never materialised at the scale predicted. DePIN projects — decentralised physical infrastructure networks — raised hundreds of millions of dollars in 2023 and 2024, hired aggressively, and are now quietly winding down or merging. Restaking, which attracted enormous attention and capital through protocols like EigenLayer, has shed teams as the promised revenue streams failed to arrive.
These are not roles that AI replaced. They are roles that existed to build products the market ultimately did not want, or that required a regulatory environment that has not yet arrived.
Block is already rehiring
Perhaps the clearest evidence that the AI narrative is more cover story than explanation comes from Block itself. Within weeks of announcing its mass layoff, the company began quietly posting new job listings. The roles are different — more focused on product execution, less on speculative research and development — but they exist.
This is a pattern familiar to anyone who has watched tech companies cycle through restructuring. Companies announce layoffs, often with a compelling narrative about efficiency or technology, then rehire for different functions at lower cost. The AI framing is new. The underlying mechanics are not.
Jack Dorsey is building AI tools. That is true. Square and Cash App are integrating automation into more of their operations. That is also true. But cutting 4,000 people because a chatbot can answer customer queries faster is a significant overstatement of what AI can currently do — particularly in financial services, where compliance, fraud detection and relationship management still require human judgment.
The strategic value of the AI story
There is a reason companies prefer the AI explanation over the honest one. Saying “we hired too many people during a speculative bubble and now the bubble has deflated” invites questions about leadership judgment. Saying “AI is making us more efficient” positions the company as forward-thinking and disciplined.
It also plays well with investors. The same institutional money that is now flowing into traditional finance infrastructure bridging into digital assets wants to see crypto companies that are lean, technology-driven and not burdened by legacy headcount. The AI narrative delivers exactly that signal.
And there is a grain of truth in it. AI tools are changing how software teams work. Coding assistants, automated testing and AI-driven analytics do mean that some functions require fewer people than they did three years ago. But “some functions require fewer people” is a very different claim from “AI is replacing the workforce.”
What is actually driving crypto job cuts
The more complete picture involves several overlapping forces that have nothing to do with language models.
First, the funding environment changed sharply. Venture capital into crypto fell for two consecutive years before showing signs of stabilisation in late 2025. Companies that raised at 2021 or 2022 valuations hired to match those valuations. When the market repriced, the headcount became impossible to justify.
Second, regulatory uncertainty continued to suppress entire product categories. Stablecoin issuers, decentralised exchange teams, and lending protocol developers all hired in anticipation of clearer rules that have arrived slowly and inconsistently. Teams built for a regulatory environment that has not fully materialised are now redundant.
Third, the speculative thesis that drove hiring in areas like metaverse, gaming tokens and social tokens collapsed faster than most predicted. The people hired to build those products have nowhere to go within the same organisations.
AI accounts for some of the efficiency gains that made it easier to justify smaller teams. But it is closer to 10% of the explanation than 90%.
What this means for the industry
The layoff wave is, in one sense, a healthy correction. Crypto hired far beyond what its actual product demand could support. A leaner industry focused on products people use — payments, trading infrastructure, tokenised assets — is more sustainable than one inflated by speculative hiring.
The intersection of AI and crypto is generating genuine interest in areas like autonomous agent payments and on-chain AI infrastructure. Those areas will create jobs. But they will create different jobs, for different skills, at different companies than the ones cutting now.
The workers losing jobs at Algorand and Block and Gemini are largely not being replaced by AI models. They are being replaced by a market that no longer needs what they were hired to build.
That is a harder story to tell. It is also the true one.
The Daily Brief by TCB
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