Global payment giant Visa has invested millions of dollars in Anchorage, a startup that provides cryptocurrency custody services for institutional investors.
The two companies are founding members of Facebook’s high-profile cryptocurrency project Libra, which was officially unveiled on June 18.
In an announcement on Wednesday, Anchorage said it has raised US$40 million in a Series B funding round, led by Blockchain Capital, with Visa and existing investors such as Andreessen Horowitz participating.
Founded in 2017 and headquartered in San Francisco, California, Anchorage has raised US$57 million so far, according to CrunchBase.
Both the amount of Visa’s contribution and Anchorage’s private valuation were not disclosed in the announcement.
Anchorage is engineered to help institutions better safeguard their cryptocurrency holdings, and offer services that investors expect from a traditional custodian, with a mission to advance institutional participation in the digital asset class.
Instead of using passwords, Anchorage requires cryptocurrency withdrawals to be approved by a client’s other employees. Then the company uses both human and artificial intelligence to validate transactions before they are executed.
In May, Anchorage introduced its end-to-end insurance coverage solution, differentiating itself from other custodians that use the “cold storage” solution, which involves stashing the private keys in hard-to-reach, offline places.
Leading hedge funds and venture firms in the crypto field, such as Blockchain Capital, Polychain, Paradigm, and a16z crypto, are among its clients.
Anchorage said the fresh capital will be used in expanding the types of assets it is supporting. The money will also enable the firm to launch participative features, such as helping clients capture returns with their crypto holdings or participate in on-chain governance.
“Traditional asset custodians enable clients to generate yield and participate using the assets they hold: for example, by collecting stock dividends and bond coupon payments, and facilitating shareholder voting,” Anchorage said.
While offering similar services, Anchorage said the fresh funding will enable the firm to unlock financial services beyond custody: “We believe custody should integrate with a full menu of financial services, so investors can operate with the least friction possible.”
Welcoming Visa as an investor, the company said: “Our work is focused on building financial plumbing that other companies depend on for their operations to run smoothly. In this regard we have always looked at Visa as a model.”
The funding round is the second known investment of Visa in a cryptocurrency-related firm. In 2015, Visa participated in a US$30 million funding round of blockchain startup Chain alongside Nasdaq and Citi.
Anchorage, Visa, and Andreessen Horowitz are three of the 28 founding members of Libra Association, which will govern the new cryptocurrency and ensure the stablecoin stays secure.
In a Medium post published on the day Libra was revealed, Anchorage co-founder and president Diogo Monica wrote: “Libra is exactly the kind of asset that Anchorage was created to hold: our custody solution enables online participation with offline assets, so that asset-holders don’t face a trade-off between security and usability.”
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