Visa has invested millions of dollars in Anchorage, a startup that secures cryptocurrency holdings for institutional investors. The two companies are founding members of Facebook's high-profile cryptocurrency project Libra.
Visa co-led Anchorage's new funding round, worth $40 million, alongside Blockchain Capital, a cryptocurrency-focused venture capital firm. This is the second known investment Visa has made in a cryptocurrency startup, the first having been made four years ago in Chain, an enterprise blockchain firm acquired in September by Lightyear, a startup affiliated with the cryptocurrency Stellar.
Anchorage was little-known before June 18, when its logo appeared alongside boldfaced names such as Mastercard, PayPal, Uber, Spotify, and, notably, Visa, on a slide introducing the Libra Association. Facebook instigated the creation of the association, a Swiss nonprofit comprised of 28 organizations that plans to grow to 100 by next year, to support its ambitious push for a global cryptocurrency.
Terry Angelos, who leads Visa's efforts in financial tech, or fintech, said in a statement that Visa is interested in supporting "companies like Anchorage who are working to provide secure infrastructure to the growing ecosystem of digital assets." He said that Anchorage "is building the foundation to support an array of new financial services."
The exact size of Visa's contribution as well as Anchorage's private valuation were not disclosed.
Diogo Monica, Anchorage's cofounder and president, told Fortune that his team has been working with Facebook on designing the technical underpinnings of the Libra cryptocurrency "since Day One, since it was basically only two people at Facebook." Those two people were David Marcus, a Facebook executive who leads the Libra project, and Morgan Beller, a Libra co-creator who heads strategy at Calibra, a Facebook subsidiary focused on Libra, Monica said.
Monica and his Anchorage cofounder and CEO, Nathan McCauley, are longtime business partners. In March 2011, the pair started in the same week on the security team at fintech firm Square, where they built its first encrypted payment card reader. Later, in 2015, they joined Docker, a "cloud" software startup, before setting out to build Anchorage two years later.
Anchorage's product offers an alternative to "cold storage," a safety measure investors commonly rely on for the secure storage of their cryptocurrency holdings. Cold storage custody, as it's called, typically involves stashing so-called private keys, the password-like strings of letters and numbers that grant ownership of cryptocurrency, in hard-to-reach, offline places, such as inside mountains or bank safety deposit boxes.
In contrast, Anchorage uses biometric-based software alongside a system of multiple approvals and human reviews to secure investors' cryptocurrency. The advantage is, Monica says, that investors gain greater access to and control over their holdings, enabling them to freely and actively participate in cryptocurrency networks. (Investors interested in quickly taking advantage of market volatility would have an easier time trading, for instance, while others seeking to "stake" their funds, an action that can reap literal dividends for holders of certain cryptocurrencies, can more easily do so, too.)
Bart Stephens, managing partner of Blockchain Capital, who led his firm's investment in Anchorage, said he has never been more impressed by a startup's technology. "I found it to be the most compelling product demo I've seen in seven years, having reviewed 4,500 companies" he told Fortune. Blockchain Capital first signed up as an Anchorage customer, and then later became an investor.
Anchorage, which has about 35 employees, so far supports Bitcoin, Ethereum, and more than 50 other virtual currencies. Monica said he plans to use the new funding to continue adding more cryptocurrencies to the mix as well as new features, such as a cryptocurrency exchange and automated book-auditing and tax preparation tools.
Anchorage has in two funding rounds raised a total of $57 million to date, including the latest cash injection.