The Benefits of Banking On Crypto—With A Crypto Bank

Last week, I sat down with Brooke Ybarra, SVP of Innovation Strategy at the American Bankers Association, to talk about crypto banking on The ABA Experience podcast. When we became a member of the American Bankers Association (ABA) last year, it marked a milestone for us, as the first operational federally chartered crypto bank joining traditional banks–some with history going back more than a hundred years.

Anchorage Digital’s experience as a member of ABA has shed new light on the future of crypto banking–and the central role that trusted third parties will play in helping traditional banks get there.

For these banks, the requisite tech build to support different blockchains can be daunting. Bitcoin and ethereum, just two examples of hundreds, require distinct infrastructure. That takes a significant amount of engineering investment, both at the onset and for continued service throughout the life of the product.

Banks need to work with a third-party company that’s both regulated and capable of managing their ability to hold and settle with crypto. That initial setup serves as a foundation that allows us to build lending and other tools for banking partners, further extending the business opportunities enabled by their foray into the crypto ecosystem.

The work of adding crypto services goes far deeper than integrating technology and APIs, and this is why banks come to work with us as a long-term partner. We work across our clients’ teams to support the full stack of controls, business lines, and 24/7 liquidity they need to ensure for a successful rollout.

Here’s what banks can expect that process to look like:

• Planning: We sit down to determine what products and services best suit the business goals and regulatory compliance needs of the bank–whether that’s buying, selling, and holding, or other new products or services.
• Preparing: The adoption of crypto assets is just as much about organizational change as it is technical implementation; partnering with Anchorage Digital allows institutions to seamlessly transition into a crypto-enabled business.
• Team Building: To drive that organizational change, we recommend the bank form a dedicated team within its organization to work with our own dedicated team. This group, with Anchorage Digital as its extension, becomes the go-to team for shaping the new crypto offerings within the bank while our technical implementations get set up. Some banks already have these teams when they come to us, and others will build them out as our discussions progress. This team needs the autonomy and authority to work with us, senior management, risk teams, technical teams, and compliance teams within the bank.
• Change management: As the bank’s relationship with Anchorage Digital progresses, we serve as your external partner, advisor, and driver for change within your organization. We’re able to help make the business case for crypto, support risk management considerations, address KYC/AML/BSA/OFAC compliance obligations, integrate the technical solutions from our APIs to your client banking cores and tech suite, and meet with any other parts of your organization that need help rolling out your crypto offering.

As a bank’s crypto business comes to life, we have then established ourselves as a trusted partner and an extension of their team, which will continue to work across the lifecycle of the bank’s crypto business.

At Anchorage Digital, we see that all banks and businesses will one day be crypto-enabled. If you’d like to learn more about banking on crypto with Anchorage Digital, please get in touch.