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Anchorage Financing Brings Institutional Investors Secure Scaled Access to Capital

Anchorage
Anchorage
Jun 16 · 4 min read

Diogo Mónica, Co-Founder and President

Anchorage is proud to announce the addition of Anchorage Financing to our growing suite of services. Before now, gaining access to capital based on crypto collateral has presented investors with a number of security risks and operational challenges. Through Anchorage Financing, investors can now obtain, draw on, pay back, and monitor the lines of credit they need in one seamless user experience, without their assets ever having to leave the security of Anchorage custody.

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Dashboard view, where customers can monitor collateral coverage in real time.

“Anchorage Financing has resolved the false choice between security and access to leverage. It’s an important milestone in the evolution of institutional crypto infrastructure, and we’re excited to see partnerships like this one, between Anchorage and Silvergate, bringing new sources of capital to the marketplace.”

-W. Bradford Stephens, Co-Founder and Managing Partner, Blockchain Capital

Since the beginning of our journey as a company, institutional investors have been wary of posting collateral outside the security of custody to obtain leverage from a capital provider — and rightfully so. The number of crypto heists already perpetrated in 2020 makes clear that those concerns were not unfounded.

In response, we began building a system to solve this problem, and reaching out to potential, vision-aligned partners. Silvergate Bank was an obvious choice for capital provider in the first truly institutional-grade leverage product in the world, having piloted an exchange leverage product with SEN Leverage, and built a world-class, 24/7/365 fiat-to-crypto on-ramp. Through Anchorage’s partnership with Silvergate, institutional investors no longer need to put their collateral at risk of theft to borrow the dollars they need to advance their investment theses.

“Whenever digital assets leave custody, security is a concern,” says Jesse Proudman, Founder and CEO of Strix Leviathan. “Anchorage has built a seamless, integrated, and secure solution.”

More than security, though, Anchorage Financing utilizes a sophisticated price monitoring system that automatically alerts the borrower if their collateral value approaches certain pre-established thresholds, allowing them to deposit additional collateral and shielding them from potential downside risk. Live tracking lets investors monitor collateral coverage ratios in real time, and a single, intuitive interface makes it simple to draw on or repay loans without the need to involve additional counterparties.

As a whole, Anchorage Financing makes possible a wide variety of use cases across the entire ecosystem.

For hedge funds, the ability to draw on lines of credit effectively at will, together with our Anchorage Trading integration, unlock opportunistic trading benefits that might otherwise be unavailable.

For market makers, Anchorage Financing can help alleviate the kind of rapid USD inventory depletion that can occasionally arise in the fast moving markets of crypto, or help meet seasonal demand for cash based on market dynamics.

Crypto funds can use longer-term loans to establish leverage and avoid the kind of tax events they might otherwise face if forced to liquidate crypto to enter new positions, and miners can leverage Anchorage Financing to borrow cash based on market conditions, or maximize profit through sophisticated rule-based reward management.

Ultimately, we believe that the future of digital asset infrastructure will be built upon cutting edge security technology and mutually beneficial partnerships between future-oriented organizations. We’re proud to partner with Silvergate, a leading bank in the crypto space with an established track record in loan underwriting and risk management, on this important step forward for the industry.

If you would like to learn more about Anchorage Financing, please get in touch.


Disclaimer: Custody services are offered through Anchorage Trust Company, a South Dakota chartered trust company. Collateral management services are offered through Anchorage Hold, LLC, a Delaware limited liability company. All loans made by Silvergate Bank, a California chartered bank. Anchorage Trust Company and Anchorage Hold are not registered with the SEC or any state securities authority. Services are not yet offered to residents of New York. Anchorage Trust Company does not engage in the offer, sale or trading of digital assets. Anchorage Hold does not engage in the offer, sale or trading of securities. Anchorage Trust Company and Anchorage Hold do not provide legal, tax, or investment advice. Services are provided only to clients that meet specified standards of sophistication and have entered into the applicable custody or trading agreements. Anchorage Trust Company and Anchorage Hold are wholly-owned subsidiaries of Anchor Labs, Inc., a Delaware corporation headquartered in San Francisco, California.

Holdings of cryptocurrencies and other digital assets are speculative and involve a substantial degree of risk, including the risk of complete loss. There can be no assurance that any cryptocurrency, token, coin, or other crypto asset will be viable, liquid, or solvent. Nothing in this communication is intended to imply that any asset held in custody by Anchorage is low-risk or risk-free. Anchorage does not provide investment, legal, or tax advice. Digital assets held in custody are not guaranteed by Anchorage Trust Company or Anchorage Hold and are not FDIC-insured.

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