Crypto bank Anchorage Digital has received a $100 million equity investment from El Salvador-based stablecoin provider Tether, valuing the bank at $4.2 billion and giving Tether a minority interest, the two companies said Thursday.
Nathan McCauley, co-founder and CEO of Anchorage Digital, described Tether's investment as "a strong signal of conviction from one of the most scaled and sophisticated operators in the digital asset ecosystem," in a statement.
The investment, which came after a spate of acquisitions and partnerships, makes Anchorage both a bigger threat to other banks that want to provide their own crypto services and a potentially stronger provider to banks that seek a partner to do things like issue their own stablecoins and enable their customers to buy and sell digital assets through the bank.
Anchorage and Tether have been collaborating for months. In September, Tether chose Anchorage Digital to issue its new U.S. stablecoin, USA₮, a dollar-pegged digital asset designed to the specifications of the GENIUS Act for U.S. companies; it currently has a market cap of $20 million. (The stablecoin Tether is best known for, USDT, is also pegged to the U.S. dollar but is mostly used to provide liquidity for international crypto trading; it has a market cap of $185 trillion.)
"Tether exists to challenge the status quo and build global infrastructure for freedom," said Paolo Ardoino, CEO of Tether, in a statement. "Our investment in Anchorage Digital reflects a shared belief in the importance of secure, transparent and resilient financial systems."
Tether has at times been controversial for the uncertain backing of its stablecoin and its digital asset's use in financial crime. In 2021, New York Attorney General Letitia James ordered Tether to end all trading activity with New Yorkers. Her office's investigation found that Tether made false statements about the backing of its stablecoin and about the movement of hundreds of millions of dollars between Tether and Bitfinex "to cover up the truth about massive losses by Bitfinex." The two companies were forced to pay $18.5 million in penalties.
Alongside the Tether investment, Anchorage Digital is allowing long-tenured team members to sell a portion of their equity at the $4.2 billion valuation. "Launching our first employee tender offer allows us to reward the builders who believed early and stayed the course," McCauley said.
Anchorage's fast-moving acquisition machine
Anchorage
The company, which is based in San Francisco, was the first crypto business to receive a national trust bank charter from the Office of the Comptroller of the Currency, back in 2021 before everyone wanted one. (In December, Ripple, Circle, BitGo, Fidelity Digital Assets and Paxos all received conditional approval for such a charter. Coinbase,
With its recent acquisitions, Anchorage is broadening out its services and the types of customers it can handle. In March, Cantor Fitzgerald chose Anchorage to be the custodian and collateral manager for its new bitcoin financing business. The following month, BlackRock chose Anchorage as an additional custodian to support spot crypto exchange-traded products.
In May, Anchorage purchased digital asset issuer Mountain
In August, Anchorage broke free of a 2022 OCC consent order for failing to implement an effective Bank Secrecy Act and anti-money-laundering program.
In December, Anchorage acquired Securitize For Advisors, a platform that lets wealth management providers buy and sell digital assets for their clients, such as tokenized real estate and private equity and cryptocurrencies such as bitcoin and ethereum.
"Investment advisors manage trillions upon trillions of assets for their wealth clients," McCauley told American Banker in a December interview. "Our expectation is that over time, more and more of them will want to add digital assets into the portfolio. These advisors want to work with a qualified custodian. They want to work with a mature service provider."
Anchorage is in talks with Securitize for Advisor's customers and expects to bring at least some of them over, McCauley said.
"The lion's share of the clients of Securitize For Advisors were already custodying with us," he said. Banks are also potential clients.
Also in December, Anchorage bought Hedgey, a platform for token management and vesting for blockchain projects that lets Anchorage work with new decentralized finance protocols.
"A lot of our institutional clients want us to support new protocols that have come out," McCauley said. "You might be a venture capital fund or a large sovereign wealth fund that has invested in one of these new protocols that is going to come to market. And so in service of serving those large institutional clients, we have said, let's focus specifically on helping protocols so that more of the protocols come to Anchorage. We can support custody for them and support more of their life cycle."
Anchorage Digital's clients include crypto protocols such as the Aptos Network and Monad. McCauley realized there was an opportunity to help them with their life cycle, from early fundraising through token distribution and scaling of their networks.
"One of the problems along that continuum is this question of vesting schedules," McCauley said, through which tokens are created and distributed to employees and investors on a set schedule.
Typically this is a manual process handled on spreadsheets. Hedgey's software manages the custody of tokens and their distribution to investors. It's now tied to the Anchorage platform so that protocol teams that use Anchorage can transfer tokens to investors through Hedgey.
Anchorage is also building out new digital asset custody and trading services banks may be interested in. For instance, it plans to offer banks the ability to take bitcoin as collateral this year.
"More and more of the large banks are going to want to have a digital asset strategy, and so we want to be able to serve them in a whole multitude of capacities," McCauley said.
Regulatory clarity and technological advancements have created a green light for traditional banks to offer digital asset services, McCauley said. In the past,
Demand is high for tokenized assets and stablecoins, according to Paul Brody, global blockchain leader at EY. "Stablecoins in particular are doing the job that many people wanted crypto to do — fast, programmable and global payments. For most users, dealing in the currency they already know is easier. We'll see huge transformation in how companies manage their corporate treasuries. Companies are going to start thinking strategically about the financial structure of their whole supply chain ecosystem. I'm not sure yet if this will turn out to be a big driver in white label and managed stablecoin services, but it's very possible."
The new crypto banks "have the big advantage of streamlined processes, modernized infrastructure and lean organizations," Brody told American Banker. "This will allow them to make much more compelling offers more quickly in the market. Traditional banks have all the customers and the capital and the brand value and a much more mature understanding of business risk, but they often struggle to really capitalize on those strengths. When it comes to running organizations, subtracting complexity is often much harder than adding capability."
The new entrants are likely to grab a lot of share in this market, "but we'll also see some of the big traditional banks really figure out this market and get going with speed," Brody said. "I think the next 24 months will give us a very good idea of who the likely winners are going to be."
