Anchorage, Armed With Banking Charter, Raises $80 Million Series C

Anchorage, which last month became the first cryptocurrency firm to secure a federal banking charter, has closed an $80 million Series C round led by Singapore sovereign wealth fund GIC. Crypto investing mainstays a16z and Blockchain Capital, as well as Lux and Indico, also contributed funding.

Anchorage, which counts former US Federal Reserve Governor Kevin Warsh and famed hedge fund manager Stanley Druckenmiller as advisors, is a digital asset custody firm, meaning it holds other companies’ cryptocurrency for them. But it goes beyond mere storage, allowing clients to quickly move funds, stake assets to earn interest, and participate in protocol governance.

Series C investments are for established companies looking to scale so they can reach new markets and/or make acquisitions. Anchorage co-founders Diogo Mónica and Nathan McCauley wrote in a Medium post today that the money will “help us help institutions participate in new ways.” 

There’s a lot to do on that front. “Being the first national bank places us at the overlap of two systems—the legacy financial system, and the emerging world of digital assets,” wrote Mónica and McCauley. “We’re committed to partnering with a wide range of financial institutions to make it easy and secure to offer crypto services.”

It also wants to bring aboard more institutional clients as firms like Tesla and Square (where Monica and McCauley once worked together on product security) gobble up large portions of Bitcoin, as well as add more crypto assets to its menu of options for clients; it already holds 38 different coins and tokens, ranging from Bitcoin to 0x.

In January, Anchorage won a trust charter from the Office of the Comptroller of the Currency (OCC), an independently run office of the US Treasury office that regulates national banks and credit unions. Since then, it’s been able to form “Anchorage Digital Bank.”

But just because it can call itself a ‘bank’ doesn’t mean it will function akin to Bank of America or Wells Fargo. Caitlin Long, founder of Avanti Bank & Trust, a digital asset bank with a Wyoming state charter, told Decrypt at the time that OCC trust companies lack access to the Federal Reserve’s payment system, limiting the traditional services they can provide. (Ironically, the Fed’s system went offline this week, causing outages for some cryptocurrency firms reliant on legacy systems.)

The real benefit for Anchorage was becoming recognized as a qualified custodian of assets by the US Securities and Exchange Commission. The charter also means Anchorage no longer needs to comply with 50 different states’ processes for money transmitter licenses.

$80 million is a sizable sum for a late-stage crypto startup. Crypto lending company BlockFi pulled in $50 million from a 2020 Series C; Coinbase, which today filed financial statements ahead of becoming a publicly owned company, snagged $75 million from a Series C in 2015.