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Anchorage Digital Bank is keeping up with the times by expanding its services to include crypto-backed loans. The San Francisco, California-based crypto custody bank recently announced that it is now offering loans to institutional clients back by Ethereum (ETH).
“Anchorage Digital is proud to announce institutional Ethereum-backed loans through Anchorage Financing,” announced Diogo Mónica, the crypto custody bank’s Co-Founder and President. Institutional clients can now access a USD line of credit backed by the world’s second-largest crypto by market cap.
The loan product was made possible through Anchorage Digital’s partnership with BankProv. U.S. commercial bank BankProv is the tenth oldest bank in the U.S. and has operated for 200 years as The Provident Bank before its 2020 rebranding.
With its new loan product, Anchorage Financing has offered a way for investors to make use of their ETH holdings to get additional funds to meet their liquidity requirements without selling their Ethereum holdings. Anchorage also offers staking for clients who want to earn additional yield for their idle ETH stash.
Anchorage Digital will hold on to the client’s ETH as collateral should the borrower fail to pay the dollar amount being loaned, according to Cointelegraph. However, the crypto will be returned to the owner once the obligation is settled.
Since ETH is used as the loan’s collateral, clients with larger ETH holdings will be granted a higher credit line. However, potential borrowers need to pass risk due diligence checks before approval for the Ethereum-backed loan is given.
“We’re pushing our full-service offering for the cryptocurrency community to the next level,” ProvBank CEO Dave Mansfield said. “We firmly believe in our mission and belief that the crypto market should be afforded the same access and rights to traditional financing tools as any other legal, well-capitalized and compliant business in America. Anchorage’s collateral management tech is world-class, making them a trusted partner in the banking industry.”
In January 2021, Anchorage became the first crypto firm to receive a charter from the U.S. Office of the Comptroller of the Currency. “In granting this charter, the OCC applied the same rigorous review and standards applied to all charter applications,” the OCC said in a statement. “By bringing this applicant into the federal banking system, the bank and industry will benefit from the OCC’s extensive supervisory experience and expertise.”
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