Not the city, the $57 million-funded cryptocurrency custodian startup.
When someone wants to keep tens or hundreds of millions of dollars in Bitcoin, Ethereum, or other coins safe, they put them in Anchorages vault.
And now they can trade straight from custody so they never have to worry about getting robbed mid-transaction.With backing from Visa, Andreessen Horowitz, and Blockchain Capital, Anchorage has emerged as the darling of the cryptocurrency security startup scene.
Today its flexing its muscle and war chest by announcing its first acquisition, crypto risk modeling company Merkle Data.Anchorage foundersAnchorage has already integrated Merkles technology and team to power todays launch of its new trading feature.
It eliminates the need for big crypto owners to manually move assets in and out of custody to buy or sell, or to set up their own in-house trading.
Instead of grabbing some undisclosed spread between the spot price and the price Anchorage quotes its clients, it charges a transparent per transaction fee of a tenth of a percent.Its stressful enough trading around digital fortunes.
Anchorage gives institutions and token moguls peace of mind throughout the process while letting them stake and vote while their riches are in custody.
Anchorage CEO Nathan McCauley tells me Our clients want to be able to fund a bank account with USD and have it seamlessly converted into crypto, securely held in their custody accounts.
Shockingly, thats not yet the normbut were changing that.Founded in 2017 by leaders behind Docker and Square, Anchorages core business is its omnimetric security system that takes passwords that can be lost or stolen out of the equation.
Instead, it uses humans and AI to review scans of your biometrics, nearby networks, and other data for identity confirmation.
Then it requires consensus approval for transactions from a set of trusted managers youve whitelisted.With Anchorage Trading, the startup promises efficient order routing, transparent pricing, and multi-venue liquidity from OTC desks, exchanges, and market makers.
Because trading and custody are directly integrated, were able to buy and sell crypto from custody, without having to make risky external transfers or deal with multiple accounts from different providers says Bart Stephens, founder and managing partner of Blockchain Capital.Trading isnt Anchorages primary business, so it doesnt have to squeeze clients on their transactions and can instead try to keep them happy for the long-term.
That also sets up Anchorage to be foundational part of the cryptocurrency stack.
It wouldnt disclose the terms of the Merkle Data acquisition, but the Pantera Capital-backed company brings quantative analysts to Anchorage to keep its trading safe and smart.Unlike most traditional financial assets, crypto assets are bearer assets: in order to do anything with them, you need to hold the underlying private keys.
This means crypto custodians like Anchorage must play a much larger role than custodians do in traditional finance says McCauley.
Services like trading, settlement, posting collateral, lending, and all other financial activities surrounding the assets rely on the custodians involvement, and in our view are best performed by the custodian directly.Anchorage will be competing with Coinbase, which offers integrated custody and institutional brokerage through its agency-only OTC desk.
Fidelity Digital Assets combines trading and brokerage, but for Bitcoin only.
BitGo offers brokerage from custody through a partnership with Genesis Global Trading.
But Anchorage hopes its experience handling huge sums, clear pricing, and credentials like membership in Facebooks Libra Association will win it clients.McCauley says the biggest threat to Anchorage isnt competitors, thoguh, but hazy regulation.
Anchorage is building a core piece of the blockchain economys infrastructure.
But for the biggest financial institutions to be comfortable getting involved, lawmakers need to make it clear whats legal.