Anchorage Moves Into Crypto Trading With New Brokerage Service

Crypto custodian Anchorage is launching a brokerage for its institutional clients, supporting the effort with new analysis and risk modeling capabilities after acquiring data startup Merkle Data.

Jan 15, 2020 at 9:30 p.m. UTC
Updated Sep 13, 2021 at 12:08 p.m. UTC

Crypto services startup Anchorage has launched a crypto platform for its institutional investors and acquired the data analysis firm Merkle Data.

Announced Wednesday, the moves mark an expansion in offerings for a company originally focused on providing institutions custodial services, as it continues to bet that adding more features like trading will carry crypto further into mainstream.

Merkle Data’s acquisition similarly expands Anchorage's reach, according to the blog post. Framing the data team as a complement to its new trading service, Anchorage said Merkle Data will boost its quantitative analysis and risk modeling capabilities.

The San Francisco-based startup has been building out its services for much of the past year. In October it added a governance platform for on-chain voting, months after introducing Stellar inflation and Tezos staking (called “baking”) to clients holding either crypto asset.

President Diogo Mónica sees these expansions as pivotal for the custodial firm he co-founded. In an opinion piece written for CoinDesk’s Year in Review series, he said, “whatever investors want to do with their assets – buy and hold, exit a major position, actively trade, participate in staking and governance – the custodian will be involved.”

It is also a response to client expectations, said Nathan McCauley, Anchorage CEO.

“This is part of a growing trend," he said in a statement sent to CoinDesk. "Our clients have been asking us to provide brokerage from day one, because they're typically part of the same workflow. Clients buy assets and then deposit them into custody, or withdraw assets from custody in order to sell them. When one provider can do both, it simplifies things for clients significantly."

The trading service features from slight differences when compared to the “majority” of over-the-counter desks operating today, Anchorage claims. Its platform uses a fee-based model instead of the prevalent principal structure.

Principal model trading allows brokerages to profit off the spread between an asset’s quote and spot price. Fee-based trading, on the other hand, makes money by commission. Anchorage said this is a more transparent way of doing business.

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