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Anchorage subsidiary receives charter to set up ‘smart’ crypto custody shop in South Dakota

by Aislinn Keely

July 16, 2019, 5:01PM EDT  ·  2 min read

Quick Take

  • Crypto company Anchorage is setting up a subsidiary in South Dakota
  • The Anchorage Trust Company has received a charter to operate in the state
  • The company will custody crypto assets without utilizing hot wallets or cold storage

by Aislinn Keely

July 16, 2019, 5:01PM EDT  ·  2 min read

Crypto custodian Anchorage is headed to South Dakota, where it’s just received a license from the state for a new subsidiary. The Anchorage Trust Company will be headquartered in Sioux Falls.

In a U.S. Senate Banking Committee hearing today, U.S. Sen. Mike Rounds of South Dakota announced Anchorage’s subsidiary has received its trust charter from the state, which has been a leader in regulatory and trust laws. The state established the U.S.’ first “Trust Task Force” more than a decade ago. 

“South Dakota has struck the right balance by developing a strong regulatory regime, while also encouraging growth in the trust industry through the adoption of innovative trust laws,” Nathan McCauley, co-founder and CEO of Anchorage, said in a statement.

Rounds also boasted the state’s efforts in digital assets, noting his state strikes a balance between progress and caution. Indeed, South Dakota contains over $3 trillion in assets, according to the FDIC. This eclipses New York three times over. It is also the home of the BitGo Trust, another qualified custodian. 

BitGo has called South Dakota home since 2018, receiving approval from the state’s banking committee last year. Anchorage’s move puts it on a similar playing field as BitGo.

As for Anchorage, it purports a unique custody solution, saying clients can use keys for transactions, audits, staking, voting and other activities in real time without removing assets from so-called cold storage. The company claims the solution is safer than hot wallets and cold storage, calling itself a “smart storage” solution.

The state’s Division of Banking will monitor the subsidiary’s finances, operations and compliance. 

The announcement of the subsidiary comes just days after Anchorage announced it raised $40 million in a Series B round. Visa and Blockchain Capital were among the lead investors, raising the company’s total funding to $57 million after a previous $17 million Series A.

Visa, Blockchain Capital and Anchorage are also all backers of Facebook’s impending crypto, Libra. The U.S. Senate held a hearing today on Libra, where Round congratulated Anchorage on its subsidiary’s plans to set up shop in his state. Senators grilled David Marcus, Facebook’s blockchain lead, on the possible effects of a Facebook crypto.