Anchorage Digital Celebrates Six Years of Providing Secure Crypto Custody

As Anchorage Digital celebrates our six-year anniversary this month, it's a fitting time to reflect on the last six years—examining lessons learned and key moments that not only shaped our company but have also left a mark on the cryptocurrency industry.

Such immense growth in six short years is a testament to our founding mission: Anchorage Digital has remained a beacon of custody and innovation, providing our institutional clients with the trust and reliability they demand in the digital asset space. Our unique hardware security module (HSM) is battle-tested and ensures a security-first approach that has differentiated us from the beginning. We’re continuously responding to emerging needs in the market and creating solutions specific to protocols, registered investment advisors (RIAs), venture capital firms, and asset managers among others.

Today, Anchorage Digital:

• Serves clients in over 30 countries
• Is home to the first and only federally chartered crypto bank
• Custodies in the tens of billions of dollars in digital assets

In honor of these six years, we’d like to share six pivotal market events and key adaptations that left a huge impact on Anchorage Digital and the crypto industry.

2017: Token Boom—Unmet Need for Secure Custody

2017 saw the onset of the token boom in the industry. Hundreds of token projects were spun up globally, representing billions of dollars of market capitalization. Lasting from early 2017 to late 2018, crypto companies sprung about and grew from this, making headways in sectors like DeFi, NFTs, and crypto infrastructure. Anchorage Digital then launched at a pivotal moment in October 2017—as the number of crypto assets grew, we recognized and understood the need for robust custody services. We founded the company based on the demand to provide institutional-grade security in a rapidly expanding digital landscape and prioritize digital asset protection.

2018-2019: Crypto Winter—Industry Demands Transparency

As we shifted into a bear market, Anchorage Digital turned our focus to building out governance solutions while emphasizing the need for more consumer protections industry-wide. We chose to start by pursuing regulatory oversight at the state level in South Dakota, receiving a trust company charter from the South Dakota Division of Banking. Our mission to build in bear markets continued when we raised a $40M Series B, led by Blockchain Capital and Visa, and launched our staking product shortly after in 2019. While the crypto winter seemed catastrophic to some, it taught us that the digital asset space was maturing. Digital asset holders, specifically institutional investors, started demanding more transparency, accountability, and a clear value proposition from blockchain projects––and Anchorage Digital helped them safely custody those assets as we developed solutions to other ways for them to participate in digital assets.

2020: The Year of DeFi—Advancing Security and Client Protections

A wave of DeFi protocols entered the space in 2020 and total value locked in DeFi rose to the billions. Anchorage Digital continued to position ourselves as the institutional gateway into the digital asset class. With the launch of Anchorage Trading and our first acquisition of Merkle Data, our reputation as the most advanced crypto custodian made our services a trusted choice for institutional investors looking to enter the space. Recognizing the risks associated with DeFi and smart contracts, our custody services continued its evolution by incorporating advanced security measures to protect clients' assets from potential vulnerabilities and exploits. We also saw immense growth in our AUC, adding support for more assets, and increasing trust among key stakeholders. 

2020 Continued: Institutions Arrive to the Crypto Industry—Interest in Digital Assets Increases

Institutional participation in cryptocurrency grew en masse in 2020, with a large focus on bitcoin, as corporations and institutions sought alternative stores of value during the pandemic. MicroStrategy and Grayscale bought bitcoin in bulk. Hedge fund manager Paul Tudor Jones publicly announced his bullish sentiments on the asset. Other major institutional players included PayPal, announcing that users would be able to buy, sell and hold not only bitcoin and bitcoin cash, but also ethereum and litecoin. With a growing interest in digital assets from institutions, Anchorage Digital sought a national trust charter and filed an application with the Office of the Comptroller of the Currency (OCC). We knew it was time to offer more integrated services on a national level with our continued approach to safely and securely provide blockchain technology in our regulated entity operating in South Dakota. It became abundantly clear that institutions were in crypto to stay and they would play an integral role in making digital assets mainstream––for good.

2021: First U.S. futures-based bitcoin ETF launches—Mainstream Adoption of Crypto

That mainstreaming continued in a big way in 2021. ProShares Bitcoin Strategy ETF became the first bitcoin futures ETF to trade on the NYSE in the United States. Earlier in the year, Anchorage Digital became the first and only federally regulated crypto bank to receive a national charter from the OCC. This turning point marked a historic moment for the crypto industry, meeting the highest regulatory requirements in the United States. Driving on 2020’s movements, Anchorage Digital partnered with Visa and facilitated the custodying of Visa’s first NFT. Each accomplishment signaled the national influence that cryptocurrency has on the traditional finance system, and contributed to legitimizing this asset class and its impact on international markets.

2022: Market Turmoil—Setting Time-Tested Standards for the Crypto Industry

The depegging of Terra’s stablecoin UST, and the collapse of its native token LUNA raised serious concerns on liquidity contractions within the industry. This catastrophic event was followed up later in the year with the collapse of FTX. Those events reinforced our longstanding belief that firm and client funds should not be commingled. And we proved that model was possible: with our exchange solution, client funds are held in segregated, on-chain accounts at Anchorage Digital Bank until trade execution. As a qualified custodian, we also set the standard for separating custodian and exchange functions in the crypto ecosystem. Like 2018, the year was defined by market volatility, we again used the bear market to build and expand alongside our institutional clients. We began offering custody and other services to RIAs, ETFs, and other market vehicles to mitigate counterparty risk. Anchorage Digital expanded to Asia, marking our global entrance in Singapore. We also partnered with one of the world’s largest asset managers, Apollo Global Management, to safely store their crypto assets.        

‍A Look Ahead‍

The past six years have been monumental for Anchorage Digital and the broader digital asset industry. As we look ahead to 2024, we’re committed to continue adapting to the market and setting the industry standard for institutions around the world with security-first in everything we do.

If you’d like to learn more about how Anchorage Digital meets institutional crypto needs through safe, secure, and regulated participation, please get in touch.