What qualifies Anchorage to become the first equity investment target of private equity giant KKR in the crypto space?

Author: Wang Xin, Gu Yu

Today, cryptocurrency custody company Anchorage announced that it has raised $350 million in Series D funding led by KKR, with participation from Goldman Sachs, Alameda Research, a16z, Kraken, and PayPal Ventures, bringing its valuation to just over $3 billion. Previously, the company's investors included well-known institutions such as the Singapore Government Investment Corporation (GIC) and Visa.

Notably, this is KKR's first equity investment in the cryptocurrency sector. According to public information, KKR manages approximately $430 billion in assets, with annual revenues of about $244 billion generated by over 100 portfolio companies, making it one of the top five private equity firms in the world.

"As a pioneer enabling institutional investors to access digital assets, Anchorage has built a best-in-class institutional-grade digital asset platform that combines modern security and usability best practices," said KKR senior executive Ben Pederson.

So, why has Anchorage attracted the attention of private equity giant KKR? What kind of cryptocurrency company is it?

Anchorage was founded in 2017 and initially provided cryptocurrency custody services for third-party institutions. It has now evolved into a comprehensive financial platform and infrastructure provider in the digital asset space, offering a range of services derived from custody assets, including trading, staking, governance, and lending, with tailored solutions for banks, market makers, miners, and various types of clients.

In terms of core custody services, Anchorage currently supports the custody of over 80 types of cryptocurrency assets, providing clients with secure and efficient custody services. In January of this year, Anchorage also received conditional approval from the U.S. Office of the Comptroller of the Currency for its national trust charter, becoming the first federally chartered digital asset bank in the country. This allows the company to clearly meet the definition of a qualified custodian, providing institutions with a direct way to fulfill their obligations under federal law.

This license has attracted more traditional institutions and even government entities to Anchorage. In July, the U.S. Marshals Service also chose the company as its digital asset custodian, and many investment banks, including Oasis Pro Markets, have selected the company for custody services.

Additionally, Anchorage supports clients in directly trading cryptocurrencies, staking cryptocurrencies for yields, participating in project governance voting, and mortgaging cryptocurrencies for loans. It also allows third-party institutions to integrate its services through APIs and offer them to their clients.

In March of this year, Anchorage announced that it had become Visa's exclusive digital asset settlement partner, supporting Visa's crypto-native settlement through the Anchorage API, helping more companies utilize Visa for stablecoin settlements.

As the lines of business such as staking and lending continue to develop, it is reported that Anchorage's custody business revenue now accounts for less than 50% of its total revenue. The company's CEO, Diogo Monica, predicts that as demand for bank-based DeFi yield products expands, new lines of business will emerge for Anchorage.

Through this round of financing, Anchorage aims to further enhance its ability to provide customized cryptocurrency infrastructure solutions for global fintech clients, offering complete cryptocurrency solutions for various institutions and accelerating efforts to integrate digital assets into the global economy.

On the day before, NYDIG, a company with a similar vision, also secured $1 billion in funding at a valuation of $7 billion, indicating that digital asset solution providers targeting traditional institutions are particularly favored by capital and are receiving significant investments, which will help drive more institutions and funds into the cryptocurrency market.