Anchorage Digital Sees Increase in Institutional Ether Staking
Anchorage Digital, a federally chartered digital asset bank, has experienced a significant rise in the amount of ether staked on its platform this year, according to Diogo Mónica, the co-founder and President of Anchorage. Over 40% of institutional clients who hold ether at Anchorage are now staking it on the platform. Mónica believes that institutions are increasingly looking to actively participate in the wider crypto ecosystem by trading, staking, and participating in governance.
The Arrival of Institutions
In contrast to previous cycles, where the entry of institutions into the crypto space was met with disappointment, Mónica argues that very few institutions have fully exited the system. With financial giants such as BlackRock and Fidelity showing interest in spot bitcoin ETF applications and EDX Markets entering the crypto exchange scene with backing from Citadel Securities and Charles Schwab, it appears that this time institutions are here to stay.
Flight to Safety and Custodial-Exchange Separation
Mónica emphasizes the importance of risk management, transparency, and safer market structure following events such as the collapse of FTX. Anchorage has benefited from this flight to safety by offering third-party custodian services. The company is actively working on market structure improvements, as evidenced by its selection as a custody provider for EDX Market’s clearinghouse business.
Mónica highlights the need for a clear distinction between custody and exchange functions in order to prevent potential conflicts of interest and market instability. Anchorage Digital advocates for reforms such as segregating company and client funds and implementing fundamental financial risk controls.
Advantages of a Federally Chartered Crypto Bank
As the only federally chartered digital asset bank, Anchorage Digital provides regulatory clarity to its institutional clients. The bank’s charter mandates the segregation of client assets in on-chain vaults, protecting clients in the event of bankruptcy. Anchorage Digital aligns with the SEC’s proposal for investment advisers to use qualified custodians for securely storing client assets.
Mónica also emphasizes the importance of providing crypto businesses with access to traditional fiat banks, stating that they deserve the same banking facilities as other industries. This access would foster innovation and benefit the US economy.
Hot Take: Institutions Embrace Active Participation in Crypto
Institutional interest in the crypto space continues to grow, with more institutions actively participating in activities such as staking and trading. This shift represents a significant change from previous cycles and demonstrates the long-term commitment of major institutional players to crypto. Anchorage Digital, as a federally chartered digital asset bank, is well-positioned to serve institutional clients and provide regulatory clarity and secure custody solutions. The separation of custodial and exchange functions, along with other market reforms, is crucial for ensuring transparency, mitigating conflicts of interest, and promoting market stability in the crypto industry.
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