On Monday, crypto platform Anchorage Digital will announce the launch of Porto, its institutional self-custody wallet, the latest product offering from the only digital assets firm to hold a national trust charter with the Office of the Comptroller of the Currency.
Anchorage’s core offering has long been a white-glove cryptocurrency custody service for institutions like VC firms and sovereign wealth funds, offered through its banking arm. The new launch comes after clients asked for a self-custody solution using Anchorage’s existing technology, cofounder and CEO Nathan McCauley told Fortune in an exclusive interview.
“Right now, many people look to self-custody solutions to allow them to do a more flexible set of activities on the blockchain,” McCauley said. “We really think of this as expansionary and additive.”
Port in the storm
Founded in 2017, San Francisco–based Anchorage Digital is one of the largest custodians in the digital assets space, safeguarding assets like Bitcoin and Ether on behalf of institutional clients. Its growth has been buoyed by investments from major crypto VCs, including a $350 million Series D round in 2021 backed by a16z Crypto and Blockchain Capital, along with more traditional players like KKR and Goldman Sachs.
Part of Anchorage’s success comes from its trust charter approval with the OCC in early 2021, as the term of acting comptroller Brian Brooks came to an end. Other firms, including Paxos and Protego, have not had the same success under the current acting comptroller, Michael Hsu.
While other crypto custodians like Coinbase and BitGo operate as state-chartered trusts under the New York Department of Financial Services, Anchorage still has the distinction of being the only firm with a national charter—a key differentiation as debate rages over what type of firms will fall under the “qualified custodian” definition currently being discussed at the Securities and Exchange Commission.
Anchorage’s new offering, Porto, will be offered by Anchorage Digital directly, rather than via its banking arm. Instead of custodying assets on behalf of clients, Porto will allow institutions to hold and handle their own assets, using the same underlying technology as its bank, such as biometric authentication and asset recovery.
Unlike its Anchorage Bank service, Porto’s self-custodial approach will allow institutions to perform a more flexible set of activities with their assets, such as connecting to distributed apps and collecting rewards. While some asset managers prefer to just hold their cryptocurrencies, others take a more active strategy—such as restaking and yield farming—to earn returns.
Providing a self-custodial option to clients could also pose challenges to Anchorage. While its bank can have stricter compliance controls when it manages custodial services for users, overseeing flows of money in and out, a self-custodial solution offers more freedom for users that could trigger anti-money-laundering controls if proposed laws expand the definition of money service businesses to include software like wallet providers—a current point of contention with legislators.
McCauley argued that with self-custodial options, clients handle compliance themselves. As politicians debate new bills that could create different oversight standards for software providers, he said that Anchorage is monitoring developments and is committed to the “highest level of compliance in the world.”
Porto launches with support for more than 200 tokens, including Bitcoin, Ether, Aptos, and Sui, as well as Ethereum assets and decentralized apps. McCauley said that by migrating the technology employed at Anchorage’s banking arm to Porto, it will be able to compete with other players because of its usability. For example, Porto will be available through both its iOS and desktop app.
ETF race
Like the rest of the crypto industry, Anchorage went through growing pains in 2023 amid a broader market retreat, cutting 20% of its staff in March 2023.
2024 is off to a better start for the sector, and especially for custodial products. Porto will likely add a new source of revenue for Anchorage, which has over $45 billion in assets under custody, according to the company. McCauley said that users will pay subscription and usage fees, compared with its banking custodial service, which charges based on assets under custody.
Another bright spot has been the launch of spot Bitcoin ETFs in January, which created a spotlight around the companies that would offer custody for the underlying cryptocurrencies. The vast majority of the issuers chose Coinbase as their initial partner.
In recent weeks, issuers have begun to explore adding secondary custodians, looking to other companies such as BitGo and Gemini. McCauley declined to share whether Anchorage was in discussions with issuers but signaled that it could be a partner in future.
“We are the natural custodian to choose for ETFs,” he told Fortune. “It stands to reason that every ETF that is holding large amounts of Bitcoin will want to diversify their customer base to best serve their investors.”
