A new crypto exchange supported by the world’s biggest financial institutions is tapping into the digital asset management services of the crypto platform Anchorage Digital. In a statement, EDX Markets (EDX) says Anchorage Digital will be the custody provider of its clearinghouse arm, EDX Clearing, which is set to launch later this year. EDX CEO […]
The post Crypto Exchange Backed by Fidelity, Citadel and Charles Schwab Set To Use Anchorage Digital As Custodian appeared first on The Daily Hodl.
It's unclear whether Anchorage Digital’s layoffs relate to the current turmoil in the U.S. banking sector.
Crypto bank Anchorage Digital announced it would be letting go of 75 employees, representing approximately 20% of its workforce, citing regulatory uncertainty in the United States as a factor in its decision.
In a March 14 statement labeled the layoffs as “a strategic realignment to better focus our resources,” and pointed to “broad macroeconomic challenges, and crypto market volatility” as other factors contributing to its shift in strategy.
It said the market conditions had boosted demand for its product and client assets under custody "are at an all-time high," but added:
"These same macroeconomic, market, and regulatory dynamics are creating headwinds for our business and the crypto industry.”
Anchorage — which became the first U.S.-based crypto firm to be granted a national trust bank charter from the Office of the Comptroller of the Currency in January 2021 — expressed continued confidence in the digital asset landscape and its ability to build “regulated solutions for digital asset holders.”
The layoffs come at a time when the banking system in the U.S. is in a state of disarray after three regional banks went under in just one week.
Related: Banks collapsing; stablecoins depegging — What is happening? Watch The Market Report live
Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank have all gone under since March 8, prompting the Federal Deposit Insurance Corporation (FDIC) to take the extraordinary step of guaranteeing all customer deposits in excess of the standard $250,000 it normally guarantees for SVB and Signature.
@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors' savings remain safe: https://t.co/YISeTdFPrO
— Federal Reserve (@federalreserve) March 12, 2023
It’s unclear if the recent developments regarding SVB, Signature, and Silvergate contributed to Anchorage’s decision to cut staff.
Anchorage did not immediately respond to Cointelegraph’s request for comment.
Layoffs within the crypto industry have considerably slowed since the beginning of the year after the nearly 3,000 positions cut by crypto firms such as crypto exchanges Coinbase and crypto.com in January were followed by a more muted 570 layoffs for February.
Anchorage Digital has marked its plans for expansion into the Asian crypto market, with co-founder Diogo Mónica noting that Singapore is just a starting point.
Anchorage Digital co-founder and president Diogo Mónica believe there is immense opportunity in Asia’s institutional investors, with the digital asset infrastructure provider on Oct. 5 announcing a “major expansion” of its platform into the region.
Speaking to Cointelegraph, Mónica said the company chose Singapore as a “jump point” into the wider Asia market as the country has become a hub for crypto companies and has a strong regulatory environment. Anchorage is currently undertaking the application process with the Monetary Authority of Singapore (MAS), the city-state's central bank.
“It’s about being in a regime that’s friendly towards crypto and that businesses want to do business in. We’re institutional only, institutions are going to Singapore, so we're following suit.”
However, Mónica said he sees “tons of opportunity” in the Thai, Indonesian, Japanese and South Korean crypto markets as well, after speaking to regulators there, though he expects the company will need a more local presence.
“Right now our strategy is being regulated in Singapore as it’s recognized by all the other regulators as a great location,” Mónica says, adding other regulators in the region have “very strict, but very clear rules, which is amazing.”
Anchorage provides infrastructure for use by financial institutions to enable digital asset custody, exchange, staking and other Web3-related services.
Mónica said however that Asian institutional investors have changed their tune on how they approached crypto investments after the wake of the Terra ecosystem collapse.
He said it was rarer for Asia-based institutions to care about the security of the assets up until recently, with a tendency of focusing more on product features. However, in the wake of the collapse and the resulting sluggish crypto market, the focus has shifted to regulation, risk management and business continuity.
“I now have conversations about bankruptcy, and whether their assets are bankruptcy remote, and whether they're on your balance sheet […] but a year ago, nobody's asking me questions about bankruptcy. A year ago, everybody was asking me questions about DeFi and things like that.”
Mónica says Anchorage already has a team in Singapore with clients from the region making up roughly 10% of its business. He sees that expanding to 25% over the next 12 to 18 months.
He said the bear market is a good time to gain a foothold and build relationships with regulators as it demonstrates its ability to attract well-established clients who “are not just tourists to the space.”
“You're seen as the leader, and you're seen as the people that expanded and have conviction, even during the bear market.”
Related: State Street: Institutional investors undeterred by crypto winter
The most popular use case for crypto that Mónica is witnessing in the region is cross-border remittances and borrowing and lending. He also mentioned mining is a common use case, not just for Bitcoin (BTC) but also companies running proof-of-stake validators.
As for the future, he says announcements of “some very large traditional firms” using its technology to offer services themselves are on the horizon, along with a focus on stablecoins and the infrastructure component which will serve use cases for those assets.
Following the introduction of the Crypto Market Integrity Coalition (CMIC) with 17 member firms last February, the organization has added eight new members. New coalition recruits include Bittrex, Merkle Science, Crystal Blockchain and Bitgo. 8 Crypto Market Firms Join Crypto Market Integrity Coalition to Improve Self-Regulation Seven months ago, 17 crypto firms announced the formation […]
The exchange custody network includes Binance.US, CoinList, Blockchain.com, Strix Leviathan and Wintermute.
Crypto custody firm Anchorage Digital has recently formed an exchange custody network with five digital asset trading platforms to segregate institutional client funds from exchanges into regulated asset vaults.
In an announcement, the custodian mentioned that it has partnered with Binance.US, CoinList, Blockchain.com, Strix Leviathan and Wintermute. According to Anchorage, this will provide institutions with direct access to a wide range of trading pairs.
The custody firm also noted that the formation of the custody network allows institutions like Registered Investment Advisors to meet their obligations to their clients in a safe environment by holding assets through a custodian, all throughout the life-cycle of a trade. Additionally, this gives clients some sort of peace of mind, knowing that their assets are not stored in hot wallets, which are prone to hacks.
Diogo Mónica, the co-founder and president of Anchorage, said that this allows the industry to move beyond "hodl." He tweeted:
Announcing @Anchorage’s new custody exchange network.
— Diogo Mónica (@diogomonica) June 9, 2022
As the crypto ecosystem has evolved beyond “hodl”–opening new doors of opportunity for investors–institutions deserve to participate as safely and seamlessly as possible.
Anchorage Digital CEO Nathan McCauley underscored that exchanges and custodians should be different, just as it is for more conventional finance structures. He noted that if the crypto space wants to gain more trust from institutional clients, the industry must "follow the same playbook" as traditional finance.
Related: Anchorage granted US's first national crypto bank charter
The formation of the exchange custody network came months after the United States Office of the Comptroller of the Currency (OCC) announced that it intends to pursue cease and desist proceedings against Anchorage for possible violations of anti-money laundering regulations. Back then, the custody firm told Cointelegraph that they are working to reinforce the areas that were identified by the OCC.
Meanwhile, back in December 2021, Anchorage secured $350 million in a funding round led by investment bigwig KKR. With this event, the firm's valuation rose to more than $3 billion. This also marked the first time that the KKR has tried its hands at investing in the cryptocurrency space.
The bank hinted that the OCC’s actions might help establish a regulatory precedent that could encourage other firms in the space to set up federally regulated digital asset banks.
The United States Office of the Comptroller of the Currency, or OCC, has said it intends to pursue cease and desist proceedings against cryptocurrency custody bank Anchorage Digital for violating certain anti-money laundering requirements.
In a Thursday announcement, the OCC said it issued a consent order against Anchorage Digital based on its “failure to adopt and implement a compliance program” in accordance with required Bank Secrecy Act, or BSA, and AML standards. The government bureau said such actions placed Anchorage Digital in violation of its operating agreement with the OCC, established in January 2021.
“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or novel activities,” said Michael Hsu, acting comptroller of the currency. “When institutions fall short, we will take action and hold them accountable to ensure compliance with federal laws and regulations.”
Anchorage neither admits nor denies the comptroller’s findings, but the order reported the bank has “begun corrective action and is committed to taking all necessary and appropriate steps to remedy the deficiencies.” A consent order, by definition, implies two parties — in this case, Anchorage and the OCC — have reached an agreement in principle on moving forward.
In a statement to Cointelegraph, Anchorage Digital said it had “already been working to strengthen the areas identified [by the OCC] and will continue to bolster these areas, reinforcing a new, digital asset standard for internal BSA/AML controls and procedures.” The bank hinted that the OCC’s actions might help establish a regulatory precedent that could encourage other firms in the space to set up federally regulated digital asset banks.
According to the OCC, there is a 15-day deadline to establish a committee for “specific corrective actions” to ensure the bank is in compliance with the AML and BSA requirements, and issue progress reports on the plan as it is executed. In addition, the government bureau ordered Anchorage make a BSA officer available to ensure compliance.
Related: OCC Comptroller calls for federal collaboration with crypto intermediaries
Anchorage was the first crypto firm in the United States to receive a national bank charter from the OCC in January 2021. Since his departure from the government bureau, former Acting Comptroller of the Currency Brian Brooks was briefly the CEO of Binance.US and now the CEO of crypto mining firm Bitfury.
New York-based crypto surveillance firm Solidus Labs is teaming up with leading digital asset exchanges, trading firms and industry associations to launch a new crypto market safety initiative. In a statement, the Crypto Market Integrity Coalition (CMIC) outlines how it will make the crypto market a safer space amid the emergence of new risks. “The […]
The post Surveillance Firm Launches Launches Push Towards Crypto Market Safety With 16 Other Industry Leaders appeared first on The Daily Hodl.
On February 7, 2022, a group of 17 digital asset companies revealed they formed an organization called the Crypto Market Integrity Coalition (CMIC). The well-known firms include crypto companies like Coinbase, Circle Internet Financial, Huobi Tech, Bitmex, Cryptocompare, and Solidus Labs. The newly formed group says the coalition is “committed to a safe and sensibly-regulated […]
The U.S. Marshals Service (USMS) is hiring crypto custody firm Anchorage Digital to handle a trove of seized cryptocurrencies including Bitcoin, Ethereum, Litecoin and Bitcoin Cash. The USMS is a law enforcement agency of the U.S. Department of Justice and a key part of the department’s Asset Forfeiture Program. The USMS’s Asset Forfeiture Division seeks […]
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Co-founders Diogo Mónica and Nathan McCauley cited the Anchorage's "stringent processes and procedures" as likely factors in the decision from the federal agency.
Crypto custody bank Anchorage Digital will be providing digital asset services for the United States Marshals Service for seized funds related to federal crimes.
In a Wednesday announcement from Anchorage, the digital asset platform said the U.S. Marshals Service, or USMS, “seized some amount of digital assets in recent years” which required a partner in the space to provide certain financial services. Anchorage will be responsible for custodying, liquidating, and other actions as part of the forfeiture process.
Anchorage co-founders Diogo Mónica and Nathan McCauley cited the platform's "stringent processes and procedures" as likely factors in the USMS decision.
According to a 2019 proposal, the U.S. Marshals’ office had been seeking a digital asset platform capable of accounting, customer management, audit compliance, managing blockchain forks, wallet creation, and the transformation of token assets into coin assets. The federal agency has seized thousands of Bitcoin (BTC), Ether (ETH), and other cryptocurrencies, regularly auctioning off the confiscated funds to the public.
Some estimates put the amount of Bitcoin the USMS has seized since 2014 at more than 185,000 BTC — roughly $7.5 billion at the time of publication — which includes funds from the now defunct marketplace Silk Road. However, other government officials may still be responsible for crypto seized from DarkSide hackers following a ransom paid for the attack on the Colonial Pipeline system earlier this year.
Related: A legal asset after all? Governments are cashing in on seized crypto
As the first crypto firm to receive a charter from the U.S. national bank regulator in January, Anchorage has steadily expanded into the crypto market. The company raised $80 million in February and later partnered with Prometheum to launch an alternative crypto trading system.
