Anchorage Digital saw business soar at the start of the year, boosted by greater demand for safer ways to custody assets following a string of crypto collapses and an uptick in regulatory scrutiny, according to its president.
(Bloomberg) — Anchorage Digital saw business soar at the start of the year, boosted by greater demand for safer ways to custody assets following a string of crypto collapses and an uptick in regulatory scrutiny, according to its president.
Assets under custody at the San Francisco-based firm jumped 80% in the first quarter from the fourth quarter of 2022, the company told Bloomberg News.
“We’re talking about billions of dollars of deposits flowing into Anchorage,” Diogo Monica, co-founder and president of Anchorage Digital, said in an interview in Lisbon, without disclosing exact figures.
The San Francisco-based firm became the first federally chartered crypto bank in 2021, receiving approval from the Office of the Comptroller of the Currency to act as a custodian for other institutions that want to offer crypto. That helped pave the way for Anchorage to gain from the flight to safety that took place after the collapse of crypto firms like FTX last year, Monica said.
The company is in final talks to offer custody to EDX Markets, a recently launched crypto exchange backed by firms including Citadel Securities, Fidelity Digital Assets and Charles Schwab Corp., Bloomberg reported last week. Anchorage Digital’s core business remains providing custodial services to institutions after it expanded into trading, lending and decentralized-finance tools as more financial institutions push into the crypto space.
Major Shift
Moves by traditional financial firms in digital assets have also created opportunities for the industry’s startup custodians and technology providers. BlackRock Inc. — the world’s largest asset manager — filed for a US spot Bitcoin ETF, and was followed by similar applications from firms including Fidelity, Invesco Ltd. and WisdomTree.
“We’re seeing a major shift from retail domination to institutional accumulation,” said Monica. “Even though the pie is smaller, the institutionalization of the pie is getting larger.”
Digital-asset investment products added $199 million in the third week of June, the biggest weekly inflows in nearly a year, according to a report from digital asset manager and crypto research firm CoinShares.
Anchorage Digital announced in March that it was laying off 20% of its staff, or 75 people, to “refocus the business.” The company isn’t planning any more more job cuts, said Monica. The firm raised $350 million at a more than $3 billion valuation from investors led by private equity firm KKR & Co. in 2021, and is not currently fundraising.
The firm is expanding its presence in Portugal, where US-born Monica lived until his early twenties and where the company has almost 100 employees. Monica is planning to relocate to Lisbon to move closer to his parents and personally oversee Anchorage’s overseas expansion plans from the Portuguese capital.
“I left for the the US when I was 24. I am a product of the education of this country,” Monica said. “I feel that I have the duty to bring it back here.”
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