Nathan McCauley likes building things. A computer science software engineer, he spent much of his career building security software, first for governments and the military, and then as one of Square’s first employees. At Square, he met Diogo Mónica and the two forged a strong connection. “He had moved from Portugal and I had moved from the midwest and we were both out of our element in California,” McCauley recalls.
After a few years at Square, McCauley and Mónica left to take jobs at Docker, a containerization technology company, where they worked on the security infrastructure that underlies most cloud platforms. “We continued to grow our partnership and learned a lot about different ways to run organizations,” says McCauley. “And toward the end of our time at Docker, we decided, ‘Hey, let’s start a company together. And the company we started was Anchorage Digital.”
He makes it sound easy. It wasn’t. Anchorage is the first national “digital asset bank” in the U.S., meaning that it is a custodian of digital assets, primarily serving institutional investors. And for that to happen, McCauley and Mónica had to get regulatory approval. “We spent a ton of time in Washington, D.C.” McCauley recalls. “Once a quarter if not once a month for years, trying to work with federal regulators.” Ultimately that paid off and last year, Anchorage was granted the first ever bank charter to manage crypto assets in the U.S.
Curiously, neither co-founder had much involvement in the crypto space before they started their company. But in this case, foresight trumped experience. In 2017, McCauley perceived that crypto was going to be more than just Bitcoin — he reckoned it would evolve into a bona fide industry that would attract increasing attention from institutional investors. So he and Mónica focused on two things they knew would be important to institutions: security of assets, and regulatory clarity. “If you combine those two things — safe and secure storage of assets, plus regulated entity — that is the sweet spot for building out infrastructure that allows crypto to grow among the institutional investor base,” says McCauley.
“The understanding of what’s going on in crypto is not very well distributed. There’s a big need to talk about the benefits and to advocate for the industry.”
Before getting federal regulatory approval, the partners launched at the state level in 2017, holding digital assets such as Bitcoin and Ethereum. As the company built trust, customers would ask if it could hold other digital assets as well, and also requested other features. “The first most obvious feature people started asking for was trading capabilities,” says McCauley. “So we added a trading capability to allow people to buy and sell Bitcoin. We built a whole kind of startup within a startup to do that.” A second area of expansion involves lending — customers can borrow dollars against their crypto assets or can lend crypto assets to other crypto traders.
Anchorage has grown tremendously since its inception. With $487 million in venture capital funding, it now has just over 300 employees. And McCauley has a clear vision for the company’s future. “One day, there’s going to be no such thing as a bank that doesn’t hold crypto,” he predicts. “So our area of expansion for the next decade is to help every bank become a crypto bank.” He envisions that Anchorage will license its APIs to traditional banks so they won’t have to reinvent the wheel to bring crypto banking services to their clients.
“I love being part of groups [like Cointelegraph Innovation Circle],” says McCauley. “There’s a shared notion of building the future together.” He’s looking forward to finding ways to collaborate with other members. “I want us to be thought of as a trusted partner for everybody in crypto. We want to help however we can,” he says. McCauley also anticipates taking advantage of the community’s publishing benefit in order to share information about crypto more broadly. “The understanding of what’s going on in crypto is not very well distributed,” he says. “There’s a big need to talk about the benefits and to advocate for the industry.”