Wharton FinTech
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Wharton FinTech

Nathan McCauley, Co-Founder and CEO of Anchorage Digital — Becoming the First Chartered Crypto Bank

In today’s episode, I’m joined by Nathan McCauley, Co-Founder and CEO of Anchorage Digital. Previously, Nathan worked as an early employee at Square and at Docker.

Nathan and I cover a range of topics, including:

Nathan’s Background:
Nathan was an early employee at Square, covering security-related issues including manufacturing the reader, security of the backend systems, accepting mobile pins on phones, and more. At Square, Nathan met his current co-founder Diogo. The two later joined Docker where they built and led the security team, developing code that helps secure containers, one of the core underpinnings of modern infrastructure. In 2017, it became clear to Nathan that institutional custody of digital assets would become necessary over the next several decades, and he set out to build the Anchorage team. Anchorage now has hundreds of clients, tens of billions of assets on the platform, and has obtained the first federal bank charter to hold digital assets.

Learnings from Square:
Nathan highlights a few of his key learnings from Square, including:

  • Adopting an internal culture of transparency
  • Enablement of employees to drive the business
  • Promoting experimentation even when projects don’t work out

On the last point of experimentation, Nathan mentions one particular product that he tried to launch at Square that didn’t quite work out — Square Card Case. Still, Nathan found the culture of experimentation inspiring and believes that it is a key driver of the continued success of the company. Finally, Nathan discusses the importance of naming at Square, and how it applies to the company’s rebranding as Block.

Obtaining a banking charter at Anchorage:
Nathan believes that for most fintech companies, obtaining a banking charter is not the right strategy, because the process is long and laborious. However, once a team has obtained a banking charter, they gain a fundamental level of trust in the United States. Nathan takes this responsibility very seriously. The Anchorage team spent many years filing for and operating a state-chartered trust company. Early in 2021, they were able to convert this state charter into a national bank. Most notably, the national charter allows Anchorage to serve as a sub-custodian to large banks, large brokers, and large fintechs as regulated financial institutions. Surprisingly — Nathan does not believe it was harder for Anchorage to obtain a charter than it would have been for a “standard” fintech company. Since the Anchorage team does not handle fiat currency, they did not have to deal with the ongoing question of whether fintech companies should have banking charters.

Products and Growth at Anchorage:
Nathan highlights a few of the key products Anchorage offers its clients, including:

  • Custody of digital assets (a significant portion of the VC and Hedge Fund community that holds crypto assets is holding them with Anchorage)
  • Crypto brokerage capability
  • A digital asset lending program
  • The ability to stake assets
  • Voting in on-chain governance

Anchorage has jumped its headcount 175% in about 1 year. Nathan talks about managing this growth in a fully remote company while simultaneously establishing a company-wide culture. The internal transparency that he learned at Square has been incredibly important in making this possible.

Overall fintech trends that Nathan finds interesting:

  • Mass adoption of crypto assets in an even more meaningful way
  • Rise of programming platforms and global applications built on public blockchains (not only for financial services products)

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Nathan McCauley:
Nathan McCauley is the Co-Founder and CEO of Anchorage, the leading digital asset platform for institutions. He started his career at Arxan Technologies, where he worked on anti-reverse engineering and key management for commercial and military applications. As an early employee at Square, he worked on the infrastructure security platform now used to move over $80B in annualized GPV. Later, at Docker, together with Anchorage Co-Founder Diogo Mónica, he built and led the security team, developing code that helps secure containers, one of the core underpinnings of modern infrastructure.

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About the Author:
Anirudh Singh is a second-year MBA Candidate at The Wharton School, where he is part of the Wharton FinTech Podcast team. He has a passion for economic development, venture capital, financial services, and all things FinTech. Don’t hesitate to reach out with questions, comments, feedback, and opportunities at singhan@wharton.upenn.edu.

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