Anchorage Digital Refines Stablecoin Strategy, Faces Industry Backlash

Summary

Anchorage Digital, a notable crypto custodian, has declared its intent to phase out support for various stablecoins, including USDC and Agora USD (AUSD), citing security risks tied to issuer concentration. This decision has triggered criticism from several industry leaders, who accuse the firm of prioritizing its own interests with its affiliated Global Dollar (USDG).

Key Points

Anchorage shifting clients from USDC and AUSD to USDG due to risks in their issuer structures.
Critics argue this move lacks transparency and favors Anchorage’s financial interests.
The stablecoin market is becoming increasingly competitive as regulations evolve within the U.S.

Detailed Overview

Anchorage Digital highlights its internal assessment that USDC and AUSD fail to meet their criteria for stability, promoting a Stablecoin Safety Matrix that evaluates stablecoins on various regulatory and reserve management metrics. According to Anchorage, the framework indicated that these stablecoins posed elevated concentration risks.

Rachel Anderika, Anchorage’s head of operations, stated, “Following our Stablecoin Safety Matrix, USDC, AUSD, and USD0 no longer satisfy Anchorage Digital’s internal criteria for long-term resilience. Specifically, we identified elevated concentration risks associated with their issuer structures — something we believe institutions should carefully evaluate.”

In contrast, Nick Van Eck from Agora contests this portrayal, claiming Anchorage’s motivations are self-serving and challenged their quality of reasoning. He pointed out that while Anchorage has given low ratings to USDC, the second-largest stablecoin with $61 billion in circulation, it had previously supported these tokens.

As the landscape of stablecoins evolves, Anchorage’s decision comes during a time when regulatory clarity is sought and competition is intensifying among major financial institutions and crypto players. Analysts predict substantial growth for the stablecoin sector, potentially expanding the current market from $250 billion to trillions in the near future.