Anchorage Digital, a federally chartered digital asset bank, has experienced a significant increase in the amount of ether staked on its platform. Co-founder and President Diogo Mónica revealed that the platform saw a fourfold increase in institutional ether staking this year. Over 40% of institutional clients who hold ether at Anchorage are now staking it on the platform.
Mónica explained that institutions are increasingly looking to actively participate in the wider crypto ecosystem, including activities such as trading, staking, and governance. This is a departure from the traditional approach of only holding digital assets. The growth in institutional ether staking is one of the major changes Anchorage has witnessed in 2023.
The interest from institutions in the crypto space has been fueled greater regulatory clarity and market developments. Despite previous skepticism around institutional involvement in crypto, Mónica argues that very few institutions who entered the market have fully exited the system. Notable financial giants such as BlackRock and Fidelity have shown a greater interest in crypto, while Anchorage’s client EDX Markets, backed Citadel Securities and Charles Schwab, has entered the crypto exchange scene.
The collapse of FTX last year has highlighted the importance of risk management, transparency, and safer market structure. Institutions have sought greater control over their assets, leading to increased demand for third-party custodians like Anchorage. The company’s assets under custody rose over 50% following the collapse of FTX.
Anchorage is actively working on improving market structure in the crypto space. The recent selection of Anchorage EDX Markets, a new institutional crypto exchange, to provide custody solutions highlights the importance of separating custodial and exchange functions. Mónica emphasized that the distinction between custody and exchange is a crucial check-and-balance missing in the crypto industry today, with potential conflicts of interest and market instability arising from platforms that serve both roles. The collapse of FTX serves as a cautionary example.
As the only federally chartered digital asset bank, Anchorage Digital offers its institutional clients regulatory clarity and security in the crypto space. The bank’s charter mandates the segregation of client assets in on-chain vaults, preventing the commingling of client and firm funds. Anchorage Digital aligns with the proposal from the Securities and Exchange Commission that investment advisers should use qualified custodians to securely store client assets.
Despite recent uncertainty in the fiat banking sector, Anchorage’s financial strength remains unaffected. Mónica believes that the crypto and blockchain industry deserves the same access to traditional banking facilities as other industries, as this would support continued innovation and job creation that benefits the U.S. economy.
Sources: The Block