Anchorage Acquires Mountain Protocol to Boost Institutional Stablecoin Use

Anchorage Digital, a federally chartered crypto bank and custodian, announced on Monday that it has entered into a definitive agreement to acquire Mountain Protocol, a stablecoin issuer. This strategic move is aimed at enhancing Anchorage's support for institutional stablecoin use.

Anchorage plans to integrate Mountain Protocol's technology, team, and licensing structure into its own operations, subject to the completion of closing procedures and regulatory approvals.

Nathan McCauley, co-founder and CEO of Anchorage, emphasized the growing importance of stablecoins in the digital economy. "Stablecoins are becoming the backbone of the digital economy," he stated. "With recent regulatory progress and new institutional use cases, our long-term vision is clear: every business will be a stablecoin business."

McCauley further highlighted the significance of the acquisition, stating, "By acquiring Mountain Protocol, we are taking a significant step forward in supporting institutional stablecoin adoption and advancing a new era of safety, security, and regulatory compliance in the global digital asset ecosystem."

This acquisition comes at a time when stablecoin adoption is rapidly increasing, with various payment firms, fintechs, and banks showing interest in the asset class. Legislation to regulate stablecoins is also looming in the U.S. These cryptocurrencies, anchored to external assets such as the U.S. dollar, offer a cheaper and faster alternative to traditional payment methods with programmable transfer capabilities.

The stablecoin market is becoming increasingly competitive, leading to consolidation. Earlier this year, Circle, the issuer of USDC, acquired Hashnote, a tokenization startup and issuer of the yield-bearing USDY token.

Mountain Protocol, regulated by the Bermuda Monetary Authority, issues the yield-bearing USDM stablecoin, which is backed by short-term U.S. Treasuries. The USDM stablecoin, launched in late 2023, experienced rapid growth in its early months, reaching a supply of $150 million, coinciding with a reward program. However, it later declined to $50 million.