Anchorage Digital Makes a Move on the Stablecoin Market
In a move that reflects the increasing importance of stablecoins in the crypto ecosystem, Anchorage Digital, the only federally chartered digital asset bank in the United States, has acquired Mountain Protocol, a stablecoin issuer. This acquisition marks a significant development in the ongoing convergence of crypto and traditional finance (TradFi).
The deal, which is subject to customary closing conditions and regulatory approval, will see Mountain Protocol‘s team, technology, and licensing framework integrated into Anchorage’s existing offerings. While the financial terms of the acquisition remain undisclosed, it underscores the rapid pace of mergers and acquisitions between crypto and TradFi firms in recent months.
A Strategic Move by Anchorage
Anchorage CEO Nathan McCauley emphasized the strategic importance of stablecoins, stating that they are rapidly becoming the backbone of the crypto economy. He envisions a future where every business will utilize stablecoins as an integral part of their operations. This vision is shared by Martin Carrica, CEO of Mountain Protocol, who sees the combination of Mountain Protocol‘s stablecoin experience and Anchorage’s robust infrastructure as a powerful force in meeting the growing global demand for stablecoin services.
The acquisition comes just nine months after Anchorage launched a stablecoin rewards program for institutions holding the PayPal USD (PYUSD) stablecoin. This move underscores Anchorage’s commitment to expanding its stablecoin offerings and positioning itself as a leading player in this burgeoning market.
The Wind Down of USDM
As part of the acquisition, Mountain Protocol announced that it will begin an orderly wind-down process for its USDM stablecoin, which operates as a yield-bearing asset. The company ceased minting USDM on May 12, but rewards will remain active for another 30 days, after which the reward rate will be set to 0% APY.
Customers can redeem their USDM through Mountain Protocol‘s platform, while other holders are encouraged to swap the stablecoin for other tokens on exchanges. Mountain Protocol‘s Ethereum-based USDM should not be confused with Mehen Finance’s USDM stablecoin, which operates on the Cardano network.
USDM experienced considerable success shortly after its launch in late 2023, reaching a $155 million market cap by March 2024. However, its market cap has since fallen below $50 million, according to RWA.xyz, which estimates there are around 10,820 USDM holders.
Implications for the Crypto Landscape
The Anchorage-Mountain Protocol deal signifies the ongoing evolution of the crypto landscape. While crypto initially aimed to disrupt traditional finance, it is now increasingly embracing elements of TradFi. The growing adoption of stablecoins, like USDM, is a testament to this shift. Stablecoins provide a bridge between the volatile world of cryptocurrencies and the stability of traditional currencies, making them increasingly attractive to businesses and investors alike.
This acquisition signals that we are entering a new era of crypto, one where regulated and established institutions are playing a more prominent role. The future of the crypto ecosystem will likely be shaped by collaborations and partnerships between crypto companies and traditional financial institutions, like the one we are witnessing with Anchorage and Mountain Protocol.
