Anchorage Digital co-founder and president Diogo Mónica believes there is immense opportunity for institutional investors in Asia as the digital asset infrastructure provider announced on October 5 a “major expansion” of its platform in the region.
Speaking to Cointelegraph, Mónica said the company chose Singapore as a “jumping point” into the wider Asian market, as the country has become a hub for crypto businesses and has a strong regulatory environment. Anchorage is currently undertaking the application process with the Monetary Authority of Singapore (MAS), the city-state’s central bank.
“It’s about being in a crypto-friendly regime that companies want to do business in. We’re just institutional, institutions go to Singapore, so we follow suit.”
However, Mónica said she also sees “tons of opportunity” in the Thai, Indonesian, Japanese and South Korean crypto markets, after speaking with regulators there, although she expects the company to need a more local presence.
“Right now our strategy is being regulated in Singapore, as all the other regulators recognize it as a great location,” says Mónica, adding that other regulators in the region have “very strict, but very clear rules, which which is surprising.”
Anchorage provides an infrastructure for use by financial institutions to enable custody, exchange, participation and other Web3-related services.
Mónica said, however, that Asian institutional investors have changed their view on how they approached crypto investments after the collapse of the Terra ecosystem.
He said it was rarer for Asian-based institutions to worry about asset safety until recently, with a tendency to focus more on product features. However, in the wake of the collapse and the resulting sluggish crypto market, attention has shifted to regulation, risk management and business continuity.
“Now I have conversations about bankruptcy and whether your assets are remote from bankruptcy and whether they’re on your balance sheet […] but a year ago, no one asks me about bankruptcy. A year ago, everyone was asking me questions about DeFi and things like that.”
Mónica says Anchorage already has a team in Singapore with clients in the region representing about 10% of its business. He sees that expanding to 25% over the next 12 to 18 months.
He said the bear market is a good time to establish and build relationships with regulators, as it demonstrates his ability to attract established customers who are “not just tourists in space.”
“You’re seen as the leader and you’re seen as the people who expanded and had conviction, even during the bear market.”
Related: State Street: Institutional Investors Undiscovered by Crypto Winter
The most popular use case for crypto that Mónica is witnessing in the region is cross-border remittances and lending and borrowing. He also mentioned that mining is a common use case, not only for Bitcoin (BTC), but also for companies that have proof-of-stake validators.
As for the future, he says announcements of “some very large traditional companies” using his technology to provide services are on the horizon, along with a focus on stablecoins and the infrastructure component that will serve use cases for these assets.