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During a tense hearing Tuesday before the Senate Committee on Banking and Media, during which David Marcus, leader of the Facebook channel, unveiled the ambitious project of the social media company Libra, Senator Mike Rounds (RS.D.) began his remarks with a short announcement:
"Mr. Marcus, thank you very much for appearing before us today, before I begin my questions, I would just like to take a moment to congratulate the South Dakota Bank Division for its forward-thinking spirit and its willingness to enable innovation in the digital currency sector.Anchorage, another founding member of the Libra badociation, has just obtained from the Division of Banking the authorization to become a corporation South Dakota Charter Trust.
Observers may have found this strange considering the content of the hearing, but in fact, Rounds was right. "Anchorage, which is a startup of cryptography in Silicon Valley," he said, "has chosen to open its second headquarters in Sioux Falls."
In the midst of fear, uncertainty and doubts about the hearings, Anchorage was improbably taking advantage of his time in the sun.
The startup recently raised $ 40 million from Series B on the promise of encrypted custody services for institutional investors "both safer and more usable." Anchorage technology avoids the traditional dichotomy of hot Internet-connected wallets and off-line cold storage in favor of hardware security modules (HSMs). The company's customized HSMs "will only handle a given transaction if certain criteria are met," according to an article posted on his blog in April.
In June, Anchorage also took a seat at the Libra Association table alongside some of the world's most powerful brands. (Investors from Anchorage, Andreessen Horowitz and Visa are also founding members of Libra's initial consortium of 28 companies.)
CoinDesk has spoken with Nathan McCauley, CEO of Anchorage, the day after the Senate hearing on why the buying jurisdictions make sense and on the expected benefits of the launch. of a subsidiary in South Dakota.
While Wyoming is perhaps the most remarkable country in crypto-industry, others have also joined it. Montana enacted a crypto-friendly securities law in May. In South Dakota, Anchorage is following in the footsteps of fellow crypto BitGo, which received the green light from regulators in 2018.
You will find below a transcript of our discussion.
The cost of living is among the lowest in the United States and there is no income tax, but are there specific reasons why you chose South Dakota for your new Anchorage Trust subsidiary?
South Dakota knows the administration of trust and this type of institutional memory means abundant access to legal advice, auditors, offices and talents. In other states with which we discussed, a trust company had not been established for more than 10 years and "more than 10 years" was considered recent.
From top to bottom, the state is really interested in innovation. The South Dakota Charter allows companies to operate at the national level so that you can serve the customers of each state. There is regulatory clarity that allows crypto-natives to increase returns for their clients through banking, staking and other activities. And, surprisingly, South Dakota is one of the largest institutional badet holders in the country – more than $ 3 trillion, according to the FDIC, three times the size of New York, followed by Ohio.
It is also a very good business climate. We are organizing an inauguration ceremony in a few weeks and the local Chamber of Commerce is helping to set it up.
How long did it take to get the charter?
We were motivated to do this quickly because we wanted to be a qualified depository for our institutional investor clients from the start. Initial contact was late December. We met with the Banking Services Division three or four days before Christmas and received our charter on July 16th. It took six or seven months.
Who else is part of the crypto community of South Dakota?
BitGo and Kingdom Trust are also present.
What challenges do you foresee at the federal level?
The SEC Broker Advisory continues to be a work in progress. We are in good shape because of our license to exercise, but greater regulatory clarity is needed for the industry.
Do you have plans for international expansion?
We are currently focusing on the United States because the United States remains the center of gravity of institutional investment, but we are open to conversations with EU and Asian citizens because many of them want to work with a US based custodian.
You have recently strengthened your ties with Libra, Visa and Andreessen Horowitz, both investors in your B series. What excites you most in the future?
Visa's investment is an important part of our history because it is the type of investor we are attracting and the growing interest in cryptocurrency. It is also very interesting that social networks such as Facebook engage in cryptocurrency to make financial services accessible to a larger part of the population in a user-friendly way.
We are excited to be part of it.
Image: Jim Benham, Anchorage Trust Agent, Attorney General Katie Biber and General Manager Nathan McCauley, in front of South Dakota Banking Division (courtesy Anchorage)
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