– Federally chartered digital asset bank, Anchorage Digital, saw a fourfold increase in the amount of ether staked on its platform this year.
– Over 40% of institutional clients holding ether at Anchorage are now staking it on the platform.
– Institutions are becoming more active in the crypto ecosystem, participating in activities such as trading, staking, and governance.
– Despite previous disappointments, more institutions are entering the crypto space, including financial giants like BlackRock and Fidelity.
– Anchorage has benefited from the flight to safety following the collapse of FTX, with institutions seeking greater control of their assets and using Anchorage as their third-party custodian.
– Anchorage separates custodial and exchange functions, providing transparency and a safer market structure.
– The rapid growth of the crypto industry has led to vertical integration, with many platforms playing both the exchange and custodian roles, potentially creating conflicts of interest and instability.
– Anchorage advocates for reforms in the crypto market, such as the segregation of funds, disclosure of related party transactions, and fundamental financial risk controls.
– Anchorage Digital, as a federally chartered digital asset bank, offers regulatory clarity and asset segregation to its institutional clients.
– Anchorage aligns with the SEC’s proposal for investment advisers to use qualified custodians to securely store client assets.
– Anchorage’s finances were not affected by the collapse of other crypto banks, but the industry deserves the same access to banking facilities as other businesses, to foster innovation and create jobs in the U.S. economy.
Federally chartered digital asset bank Anchorage Digital has seen a fourfold increase in the amount of ether staked on its platform this year, according to its co-founder and President Diogo Mónica. He noted that over 40% of institutional clients who hold ether at Anchorage are now staking it on the platform. This growth in institutional ether staking is one of the major changes that Anchorage has witnessed in 2023. Mónica stated that institutions are increasingly interested in actively participating in the wider crypto ecosystem by actively trading, staking, and participating in governance.
Mónica argued that very few institutions who entered the crypto market have fully exited the system, despite the disappointment experienced during previous crypto cycles. He pointed out that financial giants like BlackRock and Fidelity are showing a greater interest in the space, with BlackRock and Fidelity applying for spot bitcoin ETFs and Anchorage client EDX Markets, backed by Citadel Securities and Charles Schwab, entering the crypto exchange scene. Mónica believes that all major institutional players approach crypto with a long-term horizon, and what is being observed today is the result of using the bear market as an opportunity to build.
Mónica highlighted the importance of risk management, transparency, and safer market structure in light of events like the collapse of FTX. He stated that institutions sought Anchorage as their third-party custodian in response to the flight to safety that followed the collapse, leading to a rise in assets under custody. Anchorage is actively working on creating a safer market structure and was selected by institutional crypto exchange EDX Market to provide custody solutions for its upcoming clearinghouse business.
Mónica emphasized the need to separate custodial and exchange functions in the crypto market and stated that this is a foundational investor protection that has been seen in traditional finance for decades. He believes that the rapid growth of the crypto industry has made vertical integration the standard, with many platforms acting as both exchange and custodian, creating potential conflicts of interest and undermining market stability. Mónica cited the FTX collapse as an example of what can go wrong when billions in digital assets are stuck on a failed exchange.
Anchorage Digital, as the sole federally chartered digital asset bank, offers its institutional clients the regulatory clarity needed to safely participate in the crypto space. The bank’s charter mandates the segregation of client assets in on-chain vaults to prevent commingling of client and firm funds. Mónica stated that the bank aligns with the proposal from the Securities and Exchange Commission that investment advisers should use qualified custodians to securely store client assets in a compliant manner.
Finally, Mónica commented on the collapse of other crypto banks and stated that Anchorage’s finances were not affected. However, he believes that crypto and blockchain businesses deserve the same access to banking facilities as other industries to foster innovation and create jobs that benefit the US economy.
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