Funding

Visa, Blockchain Capital back $40 million round for crypto custodian Anchorage

Quick Take

  • Institutional crypto custody provider Anchorage has raised $40 million in Series B funding
  • The investment is led by Blockchain Capital, with participation from Visa and existing investors such as Andreessen Horowitz

Anchorage, the cryptocurrency custody provider for institutional investors, has raised $40 million in Series B funding, according to an announcement on Wednesday. 

Payments giant Visa and venture firm Blockchain Capital have backed the round, with participation from existing investors such as Andreessen Horowitz (a16z Crypto).

It is interesting to note that Anchorage, Visa and Andreessen Horowitz are all validator nodes for Facebook’s upcoming cryptocurrency Libra. However, that is not the reason Visa invested in Anchorage, the custodian told The Block.

The investment will go toward supporting “all digital assets and crypto-native features,” including staking and on-chain governance; integrating custody service with other financial offerings; and investing further in auditing and compliance measures, Anchorage said. 

Accounting, tax preparation and auditing are “major pain points” for institutional investors who want to add digital assets to their portfolios and solving these issues will speed up adoption, according to the firm.

“Our mission at Anchorage is to advance institutional participation in the digital asset class, and this funding will improve our ability to do precisely that,” said co-founder and president Diogo Monica.

Anchorage came out of stealth mode earlier this year, and claims to offer a “smart storage” solution superior to “hot wallets” and “cold storage” solutions. The firm recently said that it has incorporated a “custom logic” in its hardware security module (HSM), which processes a given transaction only by following “multiple layers” of biometric authentication. This approach allows clients to use their keys for transactions, audits, staking, voting and more, “in real time and without ever being removed from safe storage.”

Anchorage rivals Coinbase and BitGo, on the other hand, custody clients’ assets in cold storage. Custody is a tough space to be in, Sam Jernigan, Co-CIO of Wakem Global Opportunities Fund, a macro hedge fund that trades digital assets, told The Block recently. “Just since the summer of 2018, we’ve seen the cost of custody decline anywhere between 50 and 100 basis points,” he said. 

Wednesday’s investment round brings Anchorage’s total funding to $57 million, having previously raised $17 million in a Series A round led by a16z, with participation from Khosla Ventures, PayPal co-founder Max Levchin’s SciFi VC and AngelList co-founder Naval Ravikant, among others.