New Changes in the Encryption Power Structure: The Iron Vault of the Accomplice Institution Anchorage

After more than a decade of encryption frenzy, the wealth creation movement driven by Bitcoin’s four-year Halving is no longer. What has taken its place is the intermittent point shaving of US stocks, the US dollar, and US bonds, with discrete hotspots linking each cycle, much like the journey of Pendle from fixed income, LST, BTCFi to Ethena and Boros.

The difficulty of becoming new money is not comparable to managing old money.

The custodial institution said, whoever has money will earn money.

There are really three types of wealthy individuals in the crypto world: individual whales (early BTC miners, early ETH investors, DeFi Summer OGs), on-chain institutions (crypto-native VCs, CEXs and public chains, a few project parties), and new and old giants backed by Wall Street.

As a result, custodians have begun to differentiate. After the $3 billion funding in 2021 and the collapse of FTX-Celsius and 3AC-Luna-UST in 2022, the basic pattern of the crypto custody sector has been established, with examples as follows:

• Service chain projects Copper/Ceffu/Cobo

• Service ETF Coinbase

• Bank-level BNY (Bank of New York Mellon)

• Exchange Fireblock

Especially Coinbase, which has almost taken over all ETF custody shares, with over 80% of BTC and ETH ETF issuers choosing to cooperate with it. In the treasury strategy, MSTR also prefers Coinbase to custody BTC.

The era of retail trading has ended, and the era of institutional wealth management has arrived.

The ways to make money in the cryptocurrency world have evolved over time. Under the effect of capital scale, whoever has the most money can take the most profit. First, it was miners, then exchanges, and market makers; next will be custodial institutions, especially traditional financial funds moving on-chain. These funds will not go directly to public chains and exchanges but will be routed through custodial institutions.

Ethereum’s daily transaction volume has surpassed the peak of the DeFi Summer, reaching 1.74 million transactions. However, the growth driving this round is not from activities like memes or trading, but from the stablecoin circular lending sparked by Aave and Ethena.

Coincidentally, Aave has partnered with Plasma to create a stablecoin for traditional finance. Under the restrictions of the Genius Act, payment stablecoins cannot pay interest to users, and once the funds are on-chain, they will have nowhere to go, becoming a dead weight for the issuer.

On the other hand, as the overall trading volume of CEX continues to shrink, developing non-trading custody, staking, and yield will become a new business model targeted by TradFi such as banks. Especially under the expectation of interest rate cuts, how to channel liquidity security represented by 401(k), treasury strategies, etc., onto the blockchain will become a new entrepreneurial opportunity.

The exchange cycle is nearing its end, with on-chain and IPO pressures, Hyperliquid shows signs of flipping Binance, while exchanges like Kraken and Bullish challenge Coinbase’s status as the sole listed exchange.

Overall strategy-wise, everyone is focusing on the benefits of the post-CEX era. For old money with huge amounts of capital, the APR can be lower, but the principal must be sufficiently safe. Tether has established a physical gold vault for its own gold, and an on-chain vault is also a good business.

Under the dominance of ETFs, it is difficult for anyone to shake Coinbase’s position of power. Each new version brings new gods, and the new market landscape has also provided new opportunities for second and third tier players.

Compared to the immense wealth of the US dollar, US Treasuries, and US stocks, we are currently still at the stage of using a basin to catch it; only a sufficiently safe large bathtub will allow more liquidity to flow seamlessly.

As a result, veteran players began to diversify, and Anchorage Digital and Galaxy Digital are undoubtedly the two most representative contenders.

• Service Treasury (DATCO) Galaxy

• Stablecoin Anchorage

• Emerging ETF Staking Anchorage Digital & Galaxy Digital

Apart from BTC and ETF spot ETFs, the two Digital targets are the same, striving for more market share of Coinbase. Let’s start from this common point.

Currently, in the spot ETF market, there are two basic trends. One is generalization: altcoins and meme coins, apart from BTC and ETH, are expected to directly convert to ETFs after meeting the requirement of being listed on Coinbase derivatives for 6 months. The second trend is the approval of staking-type ETFs, which allows ETF issuers to redeem physical assets and opens up interfaces for on-chain staking services.

For example, Anchorage Digital has become the exclusive custodian and staking partner of the REX-Osprey Solana staking ETF, perfectly aligning with the above two points. If the bull market continues, then more ETF products will become the custodial focus of Digital.

On traditional ETFs, Anchorage has also partnered with 21Shares and BlackRock, and more intriguingly, it has become the custodian of the Bitcoin treasury for the Trump Media Group. One can only say that every cat has its own way, and the cold wind of Anchorage has indeed reached Mar-a-Lago.

Anchorage licensed bank’s stablecoin layout and the dream of an encryption vault.

In 2019, attempted to cooperate with Visa, until becoming a Visa USDC settlement agent bank in 2021.

In 2021, the encryption custody business started, with a valuation of 3 billion USD, becoming a crypto bank licensed by OCC and a digital asset custody service provider for the U.S. Marshals Service (USMS).

In 2022, the great cryptocurrency crash made Aptos the preferred custodian, and Anchorage co-founder Diogo Mónica is also an investor in Aptos.

In 2023, the platform’s assets grew by 80% in Q1, but 75 people were laid off, accounting for 20%, calling for regulation of stablecoins.

In 2024, co-founder Diogo Mónica will step down from the main business management, and Nathan McCauley will take full responsibility.

In 2025, Anchorage Digital will be responsible for the custody of Trump Media’s Bitcoin treasury and the acquisition of the USDM issuer Mountain Protocol.

First, let me formally introduce Anchorage Digital, founded in 2017 by Nathan McCauley and Diogo Mónica. Initially, it was just a local small trust company in South Dakota, but an extraordinary event in 2021 made Anchorage Digital the only super lucky company to receive a cryptocurrency banking license issued by the OCC (Office of the Comptroller of the Currency).

Whether it’s Silicon Valley, Wall Street, or Washington, providing exclusive financial services ultimately comes down to human relationships.

Image description: Anchorage Digital relationship network, image source: @zuoyeweb3

Anchorage Digital has developed a variety of business forms around institutional growth, including trading, derivatives, clearing, staking, and custody. It can be understood as a one-stop encryption solution for institutions. In addition to traditional cryptocurrency asset custody, Anchorage bets its future on stablecoins, which is also its biggest difference from Galaxy.

Thus, we have arrived at the first chapter of the story: The first in entrepreneurship, Timing determines everything.

In 2021, with the strict regulatory attitude towards cryptocurrency, the Democratic President Biden entered the White House. Spending tens of millions of dollars to sponsor Biden, SBF was still looking forward to the crypto spring. At this time, the former Coinbase Chief Legal Officer Brian Brooks (Brian Brooks) assumed the role of Acting Director of the OCC.

During his tenure, Brian upheld a pro-encryption stance, promoting banks to open service windows for encryption businesses, launching the Economic Access and Transformation Roundtable (REACh) initiative, and encouraging banks to adopt a non-discriminatory attitude towards encryption companies.

Anchorage seizes the opportunity, leaping from a local trust institution to Anchorage Digital Bank, transforming into a true national bank;

Once again, on January 13, 2021, Anchorage Digital Bank gained the qualification to accept USD deposits and provide encryption custody.

On the 14th, one day later, Brian officially left his position, and by a twist of fate, Anchorage Digital became the only licensed encryption bank to date.

Today, you can see the value of this license on almost all pages and product introductions of Anchorage Digital, which successfully raised a total of 430 million dollars in Series C and D rounds, sustaining until the stablecoin wave in 2025.

It is worth mentioning that among the investors, there are both crypto VCs like a16z and Wall Street giants like KKR and BlackRock.

A small episode, Bitpay and Paxos were also applying at that time, but they did not receive the favor of Lady Luck. Just now, Paxos was fined 26.5 million dollars by the New York DFS for the reason that BUSD is non-compliant.

By the way, Anchorage has both the OCC’s federal encryption banking license and New York’s Bitlicense, making it second only to BNY in terms of licensed compliance value.

However, after Brian’s departure, Anchorage also had a conflict with the OCC, but fortunately, the license remained intact.

Exclusive license, lifelong benefits.

With the support of licenses, Anchorage can custody everything, from stablecoin issuance reserves to cryptocurrencies, and even NFT businesses. However, the crypto crash in 2022 gradually destabilized Anchorage, with the first to bear the brunt being the “infighting” among the founders.

Ultimately, Diogo Mónica left Hanu Ventures to serve as a partner while retaining the position of Executive Chairman at Anchorage Digital, primarily responsible for recruitment and strategy, while Nathan McCauley fully handles the main business and starts to strategize on BlackRock’s stablecoin business.

It can be summarized that Anchorage has become the custodian for the 21Shares Bitcoin and Ethereum spot ETFs, as well as the exclusive custodian and staking partner for the REX-Osprey Solana staking ETF.

However, outside of the ETF business, Anchorage Digital has achieved a lot, especially in stablecoins. They not only collaborated with Visa to facilitate stablecoin payments but also introduced “compliant” stablecoins like PayPal’s PYUSD for institutional investors.

Even more surprisingly, the issuer of USDT, Tether, has also partnered with the custody firm and investor Cantor Fitzgerald to provide custody services for Cantor Fitzgerald’s Bitcoin business.

Anchorage Digital thus becomes the custodian of the Tether custodian.

Although it has a license, Anchorage’s business is not prominent before 2025. Despite a valuation of $3 billion and $50 billion in assets under management, it faces a lot of despair in the ETF business against Coinbase. The real focus of Anchorage Digital is on stablecoins.

As mentioned earlier, Anchorage Digital holds a federal encryption license, as its branch Anchorage Digital Bank NA ( North America branch ) can accept both USD and stablecoin deposits, as well as provide custody services.

• Off-chain: Anchorage collaborates with Ethena to expand the issuance scale of USDtb to meet the stablecoin compliance standards under the Genius Act.

• On-chain: Jointly formed the USDG stablecoin alliance with Paxos and Kraken to jointly maintain the operation of the Global Dollar Network on-chain.

However, in terms of treasury strategy, Anchorage is not without its efforts. Former BlackRock executive Joseph Chalom has joined ETH treasury company Sharplink Gaming as co-CEO, and he is also an important driving force behind the establishment of the ETF custody cooperation between BlackRock and Anchorage.

Moreover, the BlackRock BUIDL Fund is also closely related to Chalom, and Anchorage is its custodian, decoded as follows:

$BUIDL = BlackRock Issuance = Securitize (tokenization technology) + Anchorage Digital (custody) + BNY (cash services)

Further forced connections can still be made. The current chairman of the SEC, Paul Atkins, holds at least $250,000 in shares of Anchorage Digital. At the same time, Atkins is also a shareholder of Securitize, which is a partner of Ethena in the joint issuance of Converage.

Under the stimulation of Galaxy’s already listed status, there have also been rumors about Anchorage Digital going public. The expansion of the stablecoin business requires more funds to flow in, and perhaps this year, we will see the first IPO of a crypto bank.

Galaxy Digital sits on the Iron Throne of the Treasury Age.

Compared to Anchorage Digital, Galaxy is more prominent, not only being the target for Goldman Sachs’ 2022 crypto OTC trial but also a place for large Bitcoin whale outflows. In addition, Galaxy is involved in multiple areas such as Bitcoin mining, investment, and AI computing power. Furthermore, its founder Mike Novogratz has a wider network than that of Anchorage Digital.

On July 25th, Galaxy helped an early miner sell about 80,000 BTC (9 billion USD). Although sold in phases, the news led to a nearly 4% drop in Bitcoin to below 115,000 USD.

In the trading of massive amounts of capital, there were once doubts about Galaxy manipulating or disrupting the market. However, Galaxy is a relatively pure institutional investor, and it is hard to say that there is an active motive to disrupt the market. Institutions need low volatility and stability, and the profit-oriented approach drives a larger market scale.

But that’s not the main point; what makes Galaxy particularly special is its “timeliness”, which means being able to keep up with each cycle and era. Its founder, Mike Novogratz, is an early financier without a technical background, which has led him to view cryptocurrency not as a belief, but as a means of making money.

In the current time when retail investors are exiting and institutions are entering, the future aspects are more worthy of attention, especially the expansion of cryptocurrency treasury strategies.

Do you remember the ETH treasury company Sharplink that was taken over by a BlackRock executive?

In June 2025, SharpLink made multiple purchases of ETH from Galaxy OTC, with at least $800 million in buying volume. Coincidentally, Galaxy is also one of SharpLink’s investors, buying from oneself, transferring from left hand to right hand.

Apart from BTC and ETFs, Galaxy has also participated in the funding and construction of the Ethena treasury Stablecoinx, as well as the $SUI 450 million treasury Mill City Ventures III, Ltd.

Additionally, Galaxy is also expanding into more types of OTC trading, such as providing OTC support for the LST LsETH issued by Liquid Collective, while the SOL version lsSOL of Liquid Collective is also aimed at institutional investors and is supported by Anchorage Digital.

Once again, I marvel at the fact that this world is just a huge circle.

Moreover, GDN also captures Anchorage Digital and Galaxy Digital, and the synchronization between both parties verifies that the current custodial institutions are more about collaboration rather than malicious competition.

However, compared to Anchorage Digital’s enthusiasm for stablecoins based on banking licenses, Galaxy’s main business expansion direction is still treasury strategies, with more non-BTC/ETH treasuries still under construction.

Leveraging its own capital volume advantage, Galaxy not only holds 1.8 billion USD in BTC but has also strategically increased its holdings of 34.4 million USD in Ripple token XRP. Interestingly, Ripple announced a 200 million USD acquisition of Rail, a stablecoin company that Galaxy invests in and supports.

Again, I buy myself, left hand to right hand.

According to Galaxy’s report, it can be speculated that the upcoming focus for treasury or market making includes: $HYPE, $SOL, and $XRP, while Ripple completely ended its litigation dispute with the SEC, rising 10% on that day, with Galaxy ahead of retail investors.

Moreover, Galaxy has already liquidated the UNI and TIA tokens. The train of the new era no longer has the status of the old aristocracy. USDG, HYPE, and XRP are all newly listed, and the OTC oracle knows the warmth of the spring river.

In the past, OTC could only passively accept orders from whales, making it difficult to directly influence the movements of the secondary market. This is the biggest difference between it and on-site market makers. However, the treasury strategy will change all of this, as coins, stocks, and bonds will be issued in conjunction. It remains to be seen who will hold the dominant power over coin prices.

Conclusion

Custodians are the new funding crossroads, off-chain needs to securely go on-chain, and on-chain needs to comply when going off-chain. Treasury strategies will actively influence coin prices by custodians, and encryption liquidity is the most fundamental power structure. Previously it was CEX+MM (market makers), but the reality is that the glory of both is no longer.

BNY has over $52 trillion in custody, while the entire cryptocurrency market capitalization is less than $4 trillion. The total of dollar stablecoins + crypto ETFs + treasury companies is only $520 billion, indicating that the market influence of crypto custody institutions still needs considerable time to develop.

However, where the money is and where the most profit can be made is something every Founder needs to think carefully about.