“The Best of Both Worlds”: Why Anchorage Seeks a National Trust Charter

As you may have heard, Anchorage has filed an application for a national trust charter with the Office of the Comptroller of the Currency (OCC). Being granted such a charter would be significant for a number of reasons.

First, it would put Anchorage on par with other national banks from a regulatory perspective, making it easier for traditional banks to offer highly sought after crypto services through sub-custody arrangements with us.

Second, a national bank charter would preempt existing piecemeal regulatory structure and certain requirements at the state level, eliminating the need to obtain money transfer licenses on a state-by-state basis.

And third, a national bank charter significantly increases the flexibility of the products and services Anchorage can offer our existing clients. Our team has worked hard to put us on the cusp of a huge milestone both for Anchorage as a company and the financial services industry as a whole.

Earlier this year, the OCC issued a number of interpretive letters clarifying the role that federally chartered banks may play in the emerging digital asset space. Interpretive Letter #1170, in particular, made clear that national banks may provide custody services for digital assets, as well as banking services to lawfully operated cryptocurrency businesses. The letter was largely met with enthusiasm by those in the digital asset space, as well as many in traditional finance.

In the months since this announcement, interest in digital assets has surged. Many had been patiently and intently watching the space, waiting for just this kind of regulatory clarity before testing the waters or even jumping in with both feet. With investors clamoring for exposure to this emerging market, traditional financial players are now exploring in earnest what it really takes to provide the necessary services, at the level of support that has come to be expected in modern finance.

What many in traditional financial services are now discovering — or soon will — is that, when it comes to offering digital asset custody, let alone a full suite of crypto-native financial services, regulatory clarity is only half of the answer. The other half is technology.

Building the tools needed to provide crypto-native services is hugely technical work, compounded by a growing number of protocols, further complicated by myriad participatory mechanisms. Banks are seeing this, and realizing that they simply do not have the technical capabilities, nor the time to develop bespoke services for customers who want access to crypto today. As such, many are seeking to partner with firms like Anchorage that can offer seamless access to the digital asset space. And for Anchorage to offer the kind of sub-custody services these institutions seek, a national charter is the shortest, clearest regulatory path.

We have historically safely and securely provided this technology in our regulated entity operating in South Dakota pursuant to its banking laws, and now simply seek to offer such services on a more national scale. In requesting to convert our existing South Dakota trust charter to a national trust charter, we are diligently working through the same kind of state-to-national charter conversion process that has been completed countless times by legacy financial institutions in the past.

Ultimately, the fact that Anchorage is being considered for a national trust charter speaks volumes to our maturation as a company, and to the maturation of the digital asset space. From day one, Anchorage has placed huge emphasis on compliance. We’ve earned a ground-breaking insurance policy. We’ve received SOC 1 Type 1 Attestation. And we continue to strive for excellence in compliance, engineering, operations, and customer experience. We’ve already set the standard for digital asset custody, and we’d welcome the opportunity to set the standard for what it means to be a federally regulated digital asset bank.

In one Joint Trades open letter to Acting Comptroller of the Currency Brian Brooks, the American Bankers Association, together with a number of other financial trade groups and organizations working on behalf of banks and credit unions wrote, “We believe that when banks and technology companies partner, they can deliver customers the best of both worlds: innovative services that customers demand from a partner that they can trust with their financial future.” We could not agree more, and it’s in this spirit that Anchorage seeks a national trust charter.

If you’d like to learn more about Anchorage, please get in touch.