Anchorage Trust Granted Approval for the First “Digital Bank” in America

(Last Updated on January 14, 2021)

Office of the Comptroller of the Currency has granted “conditional approval” to Anchorage Trust Company as the first United States, regulated and insured, digital asset bank.

Anchorage Trust Co. is part of the Anchor Labs group stemming from San Francisco, California.

They have now instantly become a leader in the new digital finance age of American banking.

A few questions come to mind:

-How will digital assets grow alongside banking regulations in the U.S?

-Will regulators continue looking to ban “self-custody” of digital assets?

-Which cryptocurrencies will be available through this type of charter?

-How would De-Fi platforms such as Uniswap and yield farming fit in?

“Having a national bank charter places Anchorage Digital Bank firmly on the same regulatory footing as other national banks in the country. Most immediately, it puts first-of-its-kind, sub-custody services within reach for any traditional financial institution that wishes to give its clients access to digital assets. Since our founding, we’ve been credited numerous times with blurring the lines between crypto and traditional finance. Today, we’re happy to see those lines begin to be erased.”

This is a major step in offering digital assets, such as Bitcoin, directly to consumers through FDIC insured banking and a more traditionally regulated access. This country does need to offer “traditional avenues” for onboarding people to digital assets that have been excluded from Bitcoin due to various roadblocks.

Age, education, language barriers, no phone, no computer…

Many individuals are unable or unwilling to go through the steps needed to purchase and self-custody their own digital assets. Maybe they do not trust themselves, are scared of the tech, or do not have the time to fully educate themselves on hardware wallets.

“Digital banking” could greatly reduce fees, wait times, transfer delays, settlement, and more through blockchain tech.

Most likely a stablecoin will be utilized allowing lightning fast transfers and unlimited options for conversions between assets.

Digital banks will have an unmatched ability for speed and accuracy than any traditional bank before.

Utilizing a blockchain protocol will enable them to greatly save on fees, time, and reduce delays that should ultimately benefit the customers.

Clients should be empowered by this speed and have greatly increased flexibility to switch between assets fluidly.

The United States is evolving quickly with massive growth in blockchain technology and the cryptocurrency industry. Many states have been trying to figure out what the future will look like regarding the U.S. and federal regulation towards digital assets such as Bitcoin to Doge.

Leaders in blockchain and digital tech are quickly being drawn to states that are enabling crypto friendly policies that expand the evolution of digital finance – not restrict it.

South Dakota is continuing to be a leader for regulation in the digital asset/cryptocurrency financial sector of America. Similar to Wyoming, the state government clearly sees the benefit in being an early adopter of digital assets by opening the regulatory doors for new businesses to bloom.

Anchorage Trust was charted as a non-depository public trust company by the state of South Dakota in 2019. Anchorage Trust is a wholly owned subsidiary of Anchor Labs, Inc., (Anchor Labs) a Delaware corporation headquartered in San Francisco, California. Anchorage will convert from a South Dakota – chartered trust company to a national trust bank.

Companies such as Anchor Labs (HQ is located in San Francisco, CA) are taking note of the emerging opportunities with digital finance in pioneering states like Wyoming and South Dakota.

Enough so, that they are setting the foundation for digital banks in the U.S. by starting Anchorage Digital Bank in South Dakota.

The Anchorage Trust company is diving deep into a 100% digital asset platform with Anchorage Digital Bank.

So what does a “digital bank” offer to future customers?

Excerpt from Anchorage Official Site

Federally insured and secured custodians of Bitcoin and other digital assets for their clients.

Although, I firmly believe in “not your keys, not your coins!” – the old Bitcoin adage for full financial sovereignty.

I can certainly understand how difficult it can be for individuals and/or companies to custody their own Bitcoin. They do not want to take on the liability, nor have the time, or effort to put into the whole process.

FDIC insured fiat currency banking – standard and expected by most people in the U.S., but it is a far cry better than the insurance some of the crypto exchanges offer today.

While there are quite a few legitimate digital exchanges operating in the USA today, there are still a ton of scammy crypto exchanges operating from various countries.

Excerpt from Anchorage Official Site

Enabling clients to participate in the assets they are investing in – a true belief of most cryptocurrency adopters.

Having a vote on future blockchain updates, upgrades, and protocol improvements is a big part of why we own Bitcoin today.

Excerpt from Anchorage Official Site

Bitcoin is a “proof of work” protocol that uses miners to validate blocks etc.. “Proof of stake” is a newer concept in cryptocurrency which has been adopted by many of the smaller coins to be more inclusive, faster, and more environmentally friendly.

Ethereum is moving towards a POS model in it’s 2.0 upgrades and this may be a major reason it’s on the radar of finance start-ups and digital banking groups.

Good to know they can provide staking as an additional option for HODL’rs.

Fully established digital banking from all ends. They can receive and transfer digital assets however they see needed under banking guidelines.

This provision should also protect and ensure client rights to withdrawal Bitcoin to their own wallets.

A very important step.

The future of Bitcoin must include the freedom to self-custody.