How Anchorage is helping hedge funds custody hundreds of millions of dollars in NFTs

Episode 21 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Diogo Monica, Co-Founder and President of Anchorage Digital.

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As Mónica explained during an interview on The Scoop with host Frank Chaparro, there are two main reasons he believes institutions are expressing interest in NFTs:

“The first one is that it’s free marketing. You buy an NFT or you do something in crypto and for a few hundred thousand dollars you get tens of millions of dollars of mainstream press. The second reason, which is probably the major reason for the ones who want to build products, is they want to try it out… if you’re going to build a product in NFTs, you have to own one.”

Indeed, institutional interest in developing NFT products is accelerating. This month alone, Softbank, Gamestop, and Instagram all announced NFT products slated for release in the near future.

Still, Mónica noted that NFTs only represent a small portion of the digital assets of which Anchorage holds custody. “I would say it probably maps in the hundreds of millions. But the business is obviously measured in the tens of billions which makes it not significant enough yet."

The core of Anchorage's business is its institutional custodian services, which have been growing since its inception in 2017. Last year, Anchorage became the first federally chartered digital asset bank in the US and has now expanded its operations to lending and trading services.

As the crypto space has evolved in recent years, so, too, have the appetites of Anchorage Digital’s clients. Although each institution has its own particular set of motivations for entering the space, Mónica mentioned that some companies are worried about aspects of their business being “potentially disrupted by some element of crypto.”

One particularly interesting NFT play that aligns with this narrative was Visa's acquisition of a CryptoPunk NFT last summer, which Anchorage Digital helped to facilitate.

During this episode, Chaparro and Mónica also discuss:

  • Why self-custody is not viable for institutions
  • The maturation of NFT-based financial instruments and derivatives
  • The disruptive power of crypto settlements

This episode is brought to you by our sponsors FireblocksCoinbase Prime & Chainalysis
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.

About Coinbase Prime
Coinbase Prime is an integrated solution that provides institutional investors with an advanced trading platform, secure custody, and prime services to manage all their crypto assets in one place. Coinbase Prime fully integrates crypto trading and custody on a single platform, and gives clients the best all-in pricing in their network using their proprietary Smart Order Router and algorithmic execution. For more information, visit www.coinbase.com/prime.

About Chainalysis
Chainalysis is the blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Our data powers investigation, compliance, and market intelligence software that has been used to solve some of the world’s most high-profile criminal cases and grow consumer access to cryptocurrency safely. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.