Anchorage Digital co-founder and president Diogo Mónica believe there is immense opportunity in Asia’s institutional investors, with the digital asset infrastructure provider on Oct. 5 announcing a “major expansion” of its platform into the region.
Speaking to Cointelegraph, Mónica said the company chose Singapore as a “jump point” into the wider Asia market as the country has become a hub for crypto companies 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 regime that’s friendly towards crypto and that businesses want to do business in. We’re institutional only, institutions are going to Singapore, so we’re following suit.”
However, Mónica said he sees “tons of opportunity” in the Thai, Indonesian, Japanese and South Korean crypto markets as well, after speaking to regulators there, though he expects the company will need a more local presence.
“Right now our strategy is being regulated in Singapore as it’s recognized by all the other regulators as a great location,” Mónica says, adding other regulators in the region have “very strict, but very clear rules, which is amazing.”
Anchorage provides infrastructure for use by financial institutions to enable digital asset custody, exchange, staking and other Web3-related services.
Mónica said however that Asian institutional investors have changed their tune on how they approached crypto investments after the wake of the Terra ecosystem collapse.
He said it was rarer for Asia-based institutions to care about the security of the assets up until recently, with a tendency of focusing more on product features. However, in the wake of the collapse and the resulting sluggish crypto market, the focus has shifted to regulation, risk management and business continuity.
“I now have conversations about bankruptcy, and whether their assets are bankruptcy remote, and whether they’re on your balance sheet […] but a year ago, nobody’s asking me questions about bankruptcy. A year ago, everybody was asking me questions about DeFi and things like that.”
Mónica says Anchorage already has a team in Singapore with clients from the region making up roughly 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 gain a foothold and build relationships with regulators as it demonstrates its ability to attract well-established clients who “are not just tourists to the space.”
“You’re seen as the leader, and you’re seen as the people that expanded and have conviction, even during the bear market.”
Related: State Street: Institutional investors undeterred by crypto winter
The most popular use case for crypto that Mónica is witnessing in the region is cross-border remittances, borrowing and lending. He also mentioned mining is a common use case, not just for Bitcoin (BTC) but also companies running proof-of-stake validators.
As for the future, he says announcements of “some very large traditional firms” using its technology to offer services themselves are on the horizon, along with a focus on stablecoins and the infrastructure component which will serve use cases for those assets.