Investment News

Visa invests $40 million in institutional digital asset custody startup Anchorage

cryptocurrency digital asset security

Yesterday Anchorage announced a Series B funding round of $40 million led by Blockchain Capital with participation from Visa. Anchorage targets digital asset storage for institutional investors. It follows a $17 million Series A round raised last year and announced in January.

Institutional investors want their digital assets to be stored securely. But they also require access to these assets at a moment’s notice so they can exploit market opportunities.

“We believe Anchorage is the safest place to hold digital assets, having modernized crypto custody beyond physical cold storage with advanced security engineering,” said P. Bart Stephens, Managing Partner at Blockchain Capital.

“As our industry evolves, a growing number of crypto networks will depend on asset holders’ active participation in staking and governance. “

The investment will be used to extend the types of digital assets supported by Anchorage. The startup also aims to enable digital asset holders to use their tokens while in custody. That might be for staking or to participate in governance by voting. And finally, Anchorage hopes to enable assets in custody to be less cut off from other financial service offerings.

To prevent the fraudulent transfer of assets, any transaction request by the institution must be approved by two or more of its members. This request then undergoes checks by Anchorage before being approved. Hardware security modules (HSMs) like those used in banks are part of the solution.

Anchorage boasts some high profile institutional clients, some of whom are also investors. Apart from Blockchain Capital, they include Polychain, Paradigm and a16z crypto. Co-founders Diogo Mónica and Nathan McCauley both have a background in security engineering, having worked at Square and Docker. The start-up also counts former U.S. Federal Reserve Governor Kevin Walsh amongst its advisors.

Visa and Anchorage have already rubbed shoulders, as they are both founding members of Facebook’s Libra. Blockchain Capital was also an investor in Chain which both partnered with Visa and had the card company as a shareholder.

There’s plenty of competition in the institutional digital custody field.

Singapore-based Onchain Custodian (ONC) provides custody services for digital assets to institutional investors, which include Fosun International and Sequoia Capital.

Swiss FinTech METACO offers self-custody infrastructure to banks allowing them to transfer their digital assets from hot to cold wallets quickly and securely. The company leverages technology developed by the respected team at Guardtime.

Trustology offers a similar self-custody service. Both Trustology and METACO are not offering custodian services, but rather the technology to store one’s own digital assets securely.