Anchorage Digital Assets In Custody Increase Amid Increased Demand For Secure Crypto Storage

Source: Adobe / MaxSafaniuk

San Francisco-based crypto bank Anchorage Digital has seen a surge in business this year as institutions look for more secure ways to store their crypto, Bloomberg has reported.

In the first quarter of 2023, Anchorage Digital’s assets in custody increased 80% compared to the previous quarter, according to the report, while noting that the company became a federally chartered crypto bank in 2021.

According to Diogo Monica, co-founder and president of Anchorage Digital, inflows to the company are in the “billions of dollars,” and institutions are now clearly interested in cryptocurrencies.

“We are seeing a major shift from retail dominance to institutional accumulation. Although the pie is smaller, the institutionalization of the pie is getting bigger and bigger,” Mónica said.

Anchorage Digital was the first company to be federally chartered as a crypto bank when in 2021 it received approval from the Office of the Comptroller of the Currency to act as a custodian for financial institutions that offer crypto to their customers.

The firm is now in talks with the recently launched institutional crypto exchange EDX Markets to provide custody services.

Increased Institutional Adoption of Bitcoin

Meanwhile, the Bloomberg report also said that the entry of traditional financial firms like BlackRock and others into Bitcoin provides more opportunities for Anchorage Digital’s business.

BlackRock applied to list a spot-based Bitcoin exchange-traded fund (ETF) last month, hoping to become one of the first to offer a “physical” Bitcoin-backed ETF instead of Bitcoin futures contracts.

The trend of more institutional money moving into Bitcoin and the broader crypto market could also be seen in the latest fund flow data from European crypto investment and research firm CoinShares.

According to the report, $334 million has moved into cryptocurrency mutual funds over the two weeks, $125 million of which was seen in the last week alone.

98% of inflows in the last two weeks went to Bitcoin-backed funds, CoinShares said.

The strong move into cryptocurrencies, and Bitcoin in particular, represents clear evidence that optimism has returned to the cryptocurrency market, and even traditional-minded investors now seem to be betting on the Securities and Exchange Commission (SEC) could finally approve a spot Bitcoin ETF.