Anchorage Chose South Dakota for Its Crypto Custody

"Mr. Marcus, thanks very much for appearing here before us today. Before I begin my questions, I just want to take a moment to commend the South Dakota Division of Banking for their forward-thinking and willingness to allow for innovation in the digital currency space. Another founding member of the Libra Association, Anchorage, just received permission from the Division of Banking to become a South Dakota chartered trust company."

"Anchorage, which is a Silicon Valley crypto startup," he said, "Has chosen to open its second headquarters in Sioux Falls."

The startup recently raised a $40 million Series B on the promise of crypto custody services for institutional investors that are "Both more secure and more usable." Anchorage's technology avoids the traditional dichotomy of internet-connected hot wallets and offline cold storage in favor of specialized hardware security modules.

CoinDesk spoke with Anchorage CEO Nathan McCauley the day after the Senate hearing about why shopping jurisdictions made sense and what the benefits of launching a subsidiary in South Dakota are expected to be.

Montana passed a crypto-friendly securities law in May. In South Dakota, Anchorage is following in the footsteps of fellow crypto custodian BitGo, which got the green light from state regulators in 2018.

The cost of living is among the lowest in the U.S. and there are no income taxes, but are there specific reasons you selected South Dakota for your new Anchorage Trust subsidiary?

South Dakota knows trust administration, and that kind of institutional memory means abundant access to legal counsel, auditors, office space and talent.

The South Dakota Trust Charter allows companies to operate on a national level so you can serve clients from every state.

Surprisingly, South Dakota is one of the largest holders of institutional assets in the country, more than $3 trillion, according to the FDIC, three times the size of New York, followed only by Ohio.

Who else is part of the South Dakota crypto community?