How Anchorage Helps Hedge Funds Hold Hundreds of Millions of Dollars in NFTs

As Mónica explained during an interview on The Scoop with host Frank Chaparro, there are two main reasons why he thinks institutions express interest in NFTs:

“The first is that it’s free marketing. You buy an NFT or do something in crypto and for a few hundred thousand dollars you get tens of millions of dollars worth of mainstream press. The second reason, which is probably the biggest reason for people who want to build products, is that they want to try it… if you want to build a product in NFT, you have to own one.

Indeed, institutional interest in developing NFT products is accelerating. This month only Software bank, stoppage of playand instagram all announced NFT products scheduled for release in the near future.

Still, Mónica noted that NFTs are only a small portion of the digital assets Anchorage has custody of. “I would say it’s probably hundreds of millions. But the business is obviously measured in tens of billions which still makes it not big enough.”

Anchorage’s core business is its institutional custodian services, which have grown since its inception in 2017. Last year, Anchorage has become the first federally chartered digital asset bank in the United States and has now expanded into lending and trading services.

As the crypto space has evolved in recent years, so have the appetites of Anchorage Digital customers. Although each institution has its own particular set of motivations for entering the space, Mónica mentioned that some companies are concerned that certain aspects of their business are “potentially disrupted by certain elements of cryptography.”

A particularly interesting NFT game that aligns with this narrative was Visa Redemption of a CryptoPunk NFT last summer, which Anchorage Digital helped facilitate.

During this episode, Chaparro and Mónica also discuss:

  • Why self-custody is not viable for institutions
  • The Maturation of Financial Instruments and Derivatives Based on NFTs
  • The Disruptive Power of Crypto Regulations

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