Anchorage Digital, the federally chartered digital asset bank, has expanded its relationship with BlackRock and will now provide custody services for some of the cryptocurrency that backs the BlackRock crypto ETFs. The iShares IBIT Bitcoin ETF is the largest crypto ETF, with a market capitalization of $44 billion. Until now Coinbase Custody Trust was the primary crypto custodian.
On the one hand, it’s a big win for Anchorage, which was already a custodian for BlackRock’s BUIDL tokenized money market fund. When the 11 spot Bitcoin ETFs launched simultaneously early last year, there were concerns about the concentration of crypto custody, with many of the ETFs using Coinbase.
Some noted that the SEC’s custody rule, SAB 121, prevented the world’s largest custody banks from looking after the crypto. However, BNY is the IBIT Trust administrator and cash custodian. And last year it carved out an exception to SAB 121 for crypto ETFs, before SAB 121 was rescinded. Yet it is Anchorage being announced as an additional custodian. SAB 121 may have a lasting impact, because by keeping the banks out of custody, startups have far greater experience providing institutional crypto custody.
“As demand for digital asset products increases, and as our footprint in the ecosystem grows, we continue to expand our network of service providers with a focus on the highest quality institutional providers,” said Robert Mitchnick, Head of Digital Assets at BlackRock. “After a thorough evaluation, Anchorage Digital clearly meets these standards, and we are excited to be expanding our network of eligible digital asset service providers with the addition of Anchorage Digital.”
Anchorage has a long history of institutional collaboration. An early collaboration with Visa that included an investment, put it on the map. KKR led its $350 million Series D funding. And it provides custody for EDX Markets, the institutional crypto exchange founded by Citadel Securities, Schwab, Fidelity and others.
More federal digital asset banks?
Meanwhile, Anchorage still remains the only federally chartered digital asset bank. It received its charter at the very end of the previous Trump administration. Hence, there’s a good chance it will have competition within the year.
