Crypto custody service Anchorage is teaming up with Jewel, a Bermudian company seeking a banking license in order to service the digital asset industry.
By teaming up with Anchorage, Jewel plans to offer cryptocurrency-collateralized loans using digital assets that remain in secure, institutional-grade custody in order to reduce the risk of theft or fraud.
The crypto lending business is currently a $4.7 billion industry, and it is growing rapidly, the companies noted in a release. But, crypto intelligence firm CipherTrace estimated that $1.4 billion had been lost to thefts, hacks and fraud in just the first half of the year.
“The digital asset trading and crypto-collateralized loan markets are growing at a tremendous rate, and leading digital asset firms and institutions in the US, Bermuda, and globally are in search of a trusted digital asset banking and infrastructure partner,” Jewel CEO Chance Barnett said in a release. “Our relationship with Anchorage enables us to serve our clients with the rigorous security and product standards needed for bank level safety, service and compliance.”
Barnett pointed to Bermuda’s regulatory legislation, including the Digital Assets Business Act of 2018, which clarified the treatment and regulation of digital assets in the island nation, as a strength of the proposed new bank.
“As the lines continue to blur between the digital asset space and traditional finance—and as the institutional appetite for crypto-native financial services continues to swell—relationships like this one will play a key role in accelerating the maturation of the space, as well as crypto’s broader adoption,” said Nathan McCauley, co-founder and CEO of Anchorage.
Visa-backed Anchorage recently formed a partnership with crypto-friendly Silvergate Bank. But in that case, the loans will be provided by the new Anchorage Financing division while Silvergate funds the loans and processes repayments.