On The Brink with Castle Island - Nathan McCauley on Anchorage Digital Prime and Stablecoin White-Label (EP.654)

Episode Date: August 11, 2025

Nathan McCauley, the founder and CEO of Anchorage joins the show. In this episode we discuss: The passage of The Genius Act and the impact it will have on the digital asset industry. The launch of Anchorage's white label stablecoin issuance platform. Anchorage Digital Prime and how the company is working with its customers on trade execution, lending and custody. The status of the market structure bill. The Roman Storm case. To learn more about Anchorage visit their website. Follow Nathan on X. See also: OTB 595: Nathan McCauley on the evolving banking and custody landscape 

Today in the podcast, I sat down again with Nathan McCauley, the founder and CEO of Anchorage. It had been a few months since Nathan was on this podcast, and a lot has changed for Anchorage. A lot's changed for the industry, especially with the passage of the Genius Act. So in this episode, we caught up on the latest. We talked about Anchorage's white-labeled stable coin platform, talked about the launch of Anchorage Prime, got into the market structure bill a little bit in terms of the process and what that means. Then we talked about Roman Storm and some of the other things that are going on in the industry writ large. So I think you'll enjoy this one.

Without further ado, here's my conversation with Nathan for Anchorage. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion.

This podcast is for informational purposes only. Brought down by Bad Mortgage Investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy

with a new round of constitutive easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called a Bitcoin. Well, Nathan, welcome back on the podcast. I feel like so much has changed since the last time you're on just a few months ago. Yeah, things are going really fast, but glad to be back here, Matt. Thanks for having me. Well, I think the stable coin stuff would be the first thing to talk about.

That has probably changed the most since the last time you were on. So you were at the signing of the bill. Obviously, the bill has huge implications to anchorage in a positive way it looks like. So maybe just general thoughts on where we are with the signing of the Genius Act. Yeah. The funny thing was, Going to the signing there at the White House, first thing I mentioned is just it was a super formal event.

Pomp and circumstance, as we entered in the hallway, there were violinists playing. So it was just over the top, cool, just to get to be there and to experience it. And one of the things in talking to some of the senators and Congress people that were there was the celebration not just of passing the Genius Act,

fasting the first crypto bill, but also passing any bill. It actually turns out, in Congress and the way things work right now, most of the bills that pass are these behemoths. They look a lot more like big, beautiful bill where it's a omnibus that encompasses a bunch of different things. Not exactly sure on this, but I think actually the last banking bill that passed was Dodd-Frank. Wow. And so just having a bill pass at all is cool that has a single purpose, but then also to have it be about our industry and about maybe one of the most exciting

things going on in our industry was just fantastic and just so much fun to get to be there. It's such a great thing for the industry. It's a great thing for the dollar, I would say. And it's been really, maybe surprising is the wrong word, but in some ways, maybe I am surprised at just how fast some of these announcements have come out around new issuers, around remittance companies that are now going to do stable coins on their platform. Curious just how you're seeing that from your vantage point. I imagine you guys are in the middle of a lot of these conversations around people wanting to get involved. Yeah, I think probably the best way that I could describe what's happening is stable coins up till genius passing were maybe rewind 12 months and they were ambiguously legal at best. And then once genius starts getting discussed, they're like, oh, okay, like this could not just be legal, but also like a really good idea and really good policy. And so that has caused a big shift where what's happening is incredibly conservative institutions, incredibly conservative, people with very big businesses that they wouldn't want to risk with something ambiguously legal, are now saying, like, hey, we got a green light on this. And so I think we're

going to see tremendous amount of investment, tremendous amount of infrastructure get built. And I think in some senses, some people were just waiting for that green light. So that's kind of the biggest thing is people that wouldn't have touched crypto with a 10 foot pole. Now that there's a green light. There's no legal and compliance team that can say, hey, we shouldn't do this. So much more interesting developments there. And when you put that against the backdrop of what the Tam is for this market, which is the size of the dollar itself, this is going to be the biggest land grab we've ever seen. And so it's going to be really fun to see everything play out. It's going to be fascinating. And I want to talk about your white label business, because from

the outside looking in, that would seem like the thing that is just going to be on fire here, as new issuers look at this market and can leverage Anchorage as the back end. How are you guys thinking about that business. Yeah. So it developed really nicely. We're not even necessarily thinking about the stable coin space until really the Genius Act started taking shape. And what developed as part of that process was this almost amplification specifically of the OCC charter as the way to issue regulated, trusted stablecoins. And I guess it shouldn't be in his surprise because the OCC was actually established by Abraham Link. to standardize the way the dollar was treated. You had the wildcap banking era, and the OCC was

established to control the currency. That's what its namesake is about. That gets incorporated in the Genius Act, where a stable coin gets over $10 billion in market cap. It is mandated to be overseen by the OCC. And so we were pretty excited about this because at least as of now, we're the only ones that have this OCC charter. And so it's an incredible business opportunity for us that got unlocked specifically because of the way the Genius Act treats OCC charters as the special golden ticket way to issue stable coins. And so that opportunity that was presented with us, putting it's the backdrop of the geopolitical considerations that are happening here where Secretary-Treasent is saying, hey, we're going to advance the cause of US dollar and use stable

coins to do it, created a real opportunity for us. And so we put together a great plan, brought in an incredible team with Mountain Protocol, and they've built a white label issuance platform inside of our bank charter that we're going to be using to issue for a whole host of different issuers. The first one that we've announced is with Athena. Athena has a USDTB coin, which is an entirely treasury-backed coin that is used as part of their ecosystem, and they want that one to be genius compliant. And so we went ahead and announced with them. We've got a great partnership with this going with them. But that's the first of a series of, I think, very exciting announcements that are going to be coming out over the next several months

in that area. How many stable coins do you think we'll have here in the next couple of years in the U.S.? Is this one of these markets where we'll have a stable coin for every fintech platform? Everyone's going to want their own. How do you see the market structure evolving? Yeah, I think it's going to be really interesting. I think one way to think about it, maybe an analogy to AI. It appeared at First, that within AI, the people had the algorithms, we're going to be the ones who win, but it turns out who has the data. And I think there's a similar analogy happening in stablecoins where the people that are going to win in stable coins are the people with incredible distribution.

So think any corporation, any large enterprise that has a loyal customer base, particularly a loyal customer base where you have buyers and sellers. So the landscape here could be large retailers, large fintechs, even large banks themselves. Anybody that's got that natural audience with brand loyalty is going to be faced with the decision of should I roll out some sort of a stable coin strategy here? And an embedded question in that is, do I issue myself? I think many of them will decide yes, they want to issue themselves and our white label issuance is there for them.

And I think that will make a sense for a lot of them. Some of them will decide to go for consortium coins. We see some of these out there where you have concentrated liquidity across a number of different counterparties all with similar kinds of economics. And then you're also going to just see the existing popular ones grow in distribution. There'll be natural benefactors of this too. So I think we'll see a whole host of different options. We'll see more point stable coins where people integrated into their ecosystem.

We'll see more cross-industry stable coins. and it's going to be really interesting to see how it all plays out. I think there's probably not one sole winner. We'll see really a variety here with different innovations that will happen in each ecosystem or in each tech platform. I'm going to be interested to see what other sovereign nations do as a result of this. You're already starting to see some central bankers really cast shade on this and say, hey, it's like the Wildcat era in the U.S., which is really not at all.

I mean, we're talking about treasury-backed stable coins. But I think the really only way to compete if you're in other currencies to lean into this and start to create demand for your currency. Right now, from what I see, it's 99% of all stable coins are dollars. I mean, this is the type of thing that could actually collapse, really, in theory, a lot of fiat currencies, just the ability for anyone in the world to get dollars. Yeah. Probably one of the most interesting things I've seen there is there's actually, you've got to run it through Google Translate if you want to read it in English, but there's a paper written by, actually a member of the Communist Party in China. And this is even before Genius passed,

basically talking about how the U.S.-based stable coins are going to be extremely popular globally and how it's a categorical threat to the Belt and Road Initiative. This is just in plain language, this is going to happen. From someone who is looking at it saying, hey, this is kind of a problem for our geopolitical strategy globally. How do we counter this? I think you're right.

it might be that they need to compete, need to make their own stable coins. We're already in talks with some nations that are thinking about that and starting to think about what that strategy could look like. And interestingly, even they are thinking that they want to issue them in a genius compliant way. Interesting. And so there's a nice interesting thought leadership that the U.S. has done there, the real regulatory leadership and market leadership. So yeah, I think many of them will do that. And the other thing that's going to happen is that because the dollar is going to be so available within a lot of these ecosystems, many central bankers are going to have to get their act together and going to have to run their monetary policy better because there is a imminent threat.

They're no longer granted a currency control monopoly within their jurisdiction. And so there's going to need to be an up-leveling of economic policy that many of these central bankers previously didn't have a forcing function to cause discipline. I think that's spot on. Yeah, I couldn't agree with that more. So in addition to the white label on the stable coin side, you guys have been really busy on the product front. Talk a little bit about this prime offering that you guys are rolling out. I'm excited about that one. Yeah, it's pretty great. It's something we've been working on in some ways quietly for the last several years, where we've been building up the trading capabilities at Anchorage.

The overall story of it was we started the company as a custodian. Stodian, eventually got the bank charter so that we could hold assets for institutional investors. We increasingly got demand from people saying, hey, could I buy through you? I trust you so much in holding my assets. Could you also be my broker, act as my agent, and help me get into positions? And so we built it in some ways in unassuming, sure, we'll add spot. Then once we had ability to do spot, people like, hey, can I get a longer tail of coins? and then it's actually kind of a natural question to start saying, like, once you're the custodian as well, people say, hey, could I borrow against the assets that are in the platform?

And so as a result of that, margin capability is a little bit of lending. And then the latest evolution there is being able to do derivatives, derivatives where the assets in the anchorage system get used as collateral for some of the positions there across that whole continuum, just in response to client demand, we've added spot trading. all trading, some amounts of margin, and now derivatives. And so we woke up one day and we're like, oh, we made a prime. And so we were like, yeah, we should actually let more people know about that. There's actually a full service offering here that is actually pretty compelling, is doing quite well. It actually is our fastest growing business line right now. And so we thought it was time to come out, be loud and proud about it, let people know

that this is a part of the Anchorage offering. And we've got a whole host of very happy clients that have been using the system. and more people should be taking a look at us when they're looking at, how do I execute, how do I trade, how do I do derivatives? Yeah, that's awesome. I'm really excited about that. And I think it's just a natural evolution. It'll also be interesting.

I mean, I guess this dovetails a little bit into market structure is if and when we start to get clarity on tokenized securities, this type of thing is just going to be a no-brainer for market participants. So I don't want to put you on the spot with handicapping how we look here from a process perspective, but I was pleasantly surprised that the House passed the clarity bill on the same day as the stable coin bill. And it seems like they're really working on it in the Senate. I mean, from what I can see, there's developments at the Ag Committee and Senate banking. So are you feeling optimistic that we'll get a market structure bill here? I am. I think there's a lot of interesting

debates to be had there. I don't think it'll go quite as clearly as we did with Genius. I think there's a lot of agreement on what ought to happen with Genius. On clarity, it's a more ambitious bill, in a sense, is almost getting to the omnibus notion that I was talking about earlier, where there's so much stuff in there that there's a lot to cover. And unlike genius, there's maybe not as much industry alignment on some of the questions. And so when you talk to the Congresspeople, talk to the senators, one of the things I asked for is, hey, could you all agree on some of the things that you want here? People are saying this, people are saying that. I don't know if there's as much synergy and clarity of thought on that one from the industry ourselves,

which means it's more of a tougher process to come to consensus on everything that ought to come into clarity. I do think that it's going to happen. There's still a lot of momentum behind it, a lot of work to be done. And actually, interestingly, one of the things that I recently have come across is a number of the larger, say, G-Sib banks that are thinking about, hey, how do we come into crypto? They are starting to think about, okay, here's what we do on the stablecoin side, but they're actually waiting for clarity because clarity might call for them to create new types of entities or specify which one of their entities. I mean, most of the GSIbs have every kind of regulated entity out of which of those should their crypto business run. Maybe the spot and derivatives, things might go to CFTC, like said token securities, should those happen within the broker dealer.

So there's a little bit of a wait-and-see approach that some of the larger institutions are taking, just waiting for, no pun intended, literally the clarity to come from clarity. And so I think that'll be really helpful once that comes through to unlock some of those bigger investments into the industry. I guess it would be helpful, too, if the bank lobby was on board with whatever this ends up looking like. I guess it was the interest provision that was the real issue for them fighting against the genius bill or certain parts of the genius bill. In the meantime, it's interesting to have Chairman Atkins coming out with effectively a speech that says, I'm going to start acting on some of these things absent the bill. I'm going to start giving guidance out of the SEC on how to do some of these things out of a broker dealer.

So maybe it is that we start to operate as an industry as if we have market structure clarity before we actually have that bill signed into law. Yeah, I think there's a tremendous amount of stuff that can be figured out within the agencies. A agencies are given actually a tremendous amount of latitude to decide on some of those things. You've seen the SEC starting to do this with, like you said, both the Crypto Task Force and then really kind of like culminating most recently in Chairman Atkin's speech, which was I think fantastic, welcome speech by many of us in the crypto industry. There's a lot of things that they're going to be able to solve. But one of the things that I would underscore is even in the first Crypto Task Force meeting at the White House, basically all of us from the industry were saying, hey, there's a lot of, lot of rulemaking that can happen within the agencies. There's a lot we can do with executive

orders, but we actually do need permanent legislative solutions because the lines of investments we need to make are decades-long business models that need to work and be reliable in order for us to invest in this area. And so it needs to be subject to something stronger than, say, current administration, current leadership at the agencies. And so even though I think there's incredible work happening in the SEC, and frankly, incredible work happening at the OCC as well. They're doing an incredible amount of clarification there. We do need the enduring clarity that'll come from a bill being passed. Yeah, I mean, the last thing we need is all this positive momentum getting rolled back if and when we get a Gary Gensler type back at the SEC.

This is all positive. The one thing I guess the industry has been really zoned in on the negative side is this Roman storm case. Curious if you have any thoughts on the conviction on the one account there of running a unlicensed money transmitter? The most surprising thing to me is just the cognitive dissonance that's happening there. I kept wondering if maybe there was some sort of smoking gun or something that was more than what we were shown in the evidence and in the testimony that justified why to go after this particular case, because it seems so opposite of everything else that's happening within the industry. I mean, you have literally FinCEN reversing course on some of their

questions around mixers and OFAC saying that, oh, in fact, the case coming down and saying, hey, you can't sanction smart contracts. You have the whole of government being very positive about crypto. And then we got this outlier, this guy that made some software, is going to get convicted. So the whole thing is very surprising to me. I almost wonder if this is almost made to be appealed. Oh, yeah, for sure. Because you like get this and then get it appealed. And then we maybe end up with a precedent coming out of this that rules in the opposite direction. I'm not saying that that's necessarily like the goal, but I think possibly what we have here is this thing gets appealed to who knows how high it goes, but at some level, if it gets overturned, then you've got

a permanent change to the interpretation of some of these particular money laundering and MSB rules. The other part of it I think is interesting is, do we think that he gets pardoned? Interesting. Yeah. Trump has been very willing to look at some of these kinds of cases and say, hey, we're going to issue a pardon here and that it's a way of doing things. We saw some of those early on. So whether it's an appeal that comes through or maybe a presidential pardon, I don't know exactly how it's going to play out, but it doesn't feel like the story is the end of the story so far. I agree.

I mean, the appeal part was the first thing I thought of. As soon as I saw that, I said, okay, so you have FinSend guidance. This is going against FinCEN. guidance, it seems like the easiest case to win on appeal. The pardon one's interesting. In a lot of ways, maybe I hope that they can just get the appeal done faster. So we can actually, to your point, get that precedent. The precedent would be the more enduring win. The pardon would be somehow a moral victory, but maybe not as enduring as a precedential ruling in the other direction. So yeah, we'll see how it goes. There's just so much going on at the administrative level here,

which is it's breathtaking to see how fast they're going. Today, this is probably going to happen by the this podcast comes out, but it looks like we're going to get an executive order around the debanking stuff and then an executive order around crypto in 401ks, along with alts as well, other types of alts. So curious if you have a view on those developments. I think it's interesting. We're recording this without the benefit of having read the executive order. I was invited to testify at the Senate Banking Committee. The first hearing that the Senate had in this session was actually about debanking and got to talk a little bit about the crypto story. You guys have covered it extremely well in podcasts. Basically, all of us in crypto got debanked in some way, share, or form.

I think probably one of my biggest things that I tried to convey with that, at least in the case of crypto debanking, I don't think it was the banks that were trying to do this. I think the banks were actually, in a sense, the victims. In response to one of Senator Warren's questions, I responded. I'm not going to say which bank debanked me because I don't think it was that. I think this was more of a regulatory action than a banking committee leadership teams deciding that they didn't want to work with crypto. So I think it'll be interesting to see what the executive order comes out with here. Is this about the regulators forcing banks to do this? Or is this more like, hey, religious or political things, which actually in some ways, the religion and political ones might actually be

the banks just decided that didn't want to work with these people for reputational reasons or other things like that. I mean, we certainly saw that in the tech companies deplatforming. And so the banks deciding to kick out people that they didn't want the reputational risk of maybe what ends up happening here. Generally, it really hits at the heart of you. I can say personally that when Anchorage went through debanking, there's a sense in which you look at and you're like, hey, is this a problem with me? You actually start to question, is this a skill issue? Do I just suck? Is that what's happening? And so it's a very disruptive thing to have it happen to you and especially happen at a large scale. So I think it is something that's worth

real considerations. I welcome the executive order to start to look at this. I know both in the House and the Senate, there are potential bills around this called Firm Act that is trying to codify the idea that you can no longer kick people out based on reputation risk. You can't assess them based on reputation risk. So I think it's another one of these cases where it's worth having an executive order to bring light to this issue and then also ideally worth a permanent legislative solution that can come in. And then I would also say some amount of reform at the regulators themselves because they do carry immense discretional power. And so some ways they need to assess how to prevent themselves with much power comes much responsibility. It's right to give

the banking regulators a lot of power because it's a very risky business generally to be in banking, and so they should have a lot of power. But how do they wield that appropriately is something that they may need to self-police, honestly? Yeah, it's a good point. I mean, I guess you're handling that a lot more diplomatically than maybe I would because I'm grudging hard against a lot of the banks that were deplatforming many of our portfolio companies. A bunch of them are now doing press releases about doing things in the stable coin space, which is fascinating. Fascinating. I guess you're right. Ultimately, the way I think a lot of this went is that you had people that were actually at the White House making phone calls to banking

regulators to lean on them. And so if you're getting that level of pressure from what looks like the very top of the government, as the bank, you really have to respond the way that they want you to respond, it seems like. Yeah, I mean, the kinds of things that bank regulators can do to banks at a procedural level, it's pretty incredible. Things like growth restrictions. So you can literally be told, thou shalt not grow. If your bank regular comes in, even if they ask a bunch of questions about a particular client type, you can read between the lines and be like, hey, should I risk being able to grow the business for the next four years? Or should I read the room in a sense?

And so a lot of this, I think, happens in a read the room thing where there's no smoking gun. But your internal risk calculus is like, do I risk the whole enterprise for these clients? Or not. And so as someone who's been in those exams, I kind of have an intuitive. sense of what happens there. To me, it's far more on the regulators self-policing. The things I think like the Firm Act will really help there. I want to shift gears a little bit. One of the things that we talk with CEOs quite a bit about is just general theories on capital allocation, when to ramp up burn, when to pull back burn. Obviously, the past four years has been a lot of pulling back on burn

rates, slowing down hiring plans, things like that. Right now, we're in an environment where you just Ted Circle go public to just phenomenal public market reception. You have a lot of M&A happening. You have these public market access vehicles for treasury companies going live every day. It just feels like now is the time to turn on the afterburners. How do you think about that from your seat in terms of just allocating capital at the Anchorage level? Yeah. So the future is unknown, but the past suggests that the way the crypto industry works is a typical financial market boom and bust cycle. It just happens that the crypto industry has that that is on a compressed sign wave. So our boom and bust cycles go almost like clockwork.

People that try to predict what exactly it is, I never quite know. But what I do know is if you want to capture the upside during the bull cycle, you pretty much have to have built stuff during the bear cycle. And so that's one of the most common things to think about is that if you are capitalizing on things, you're probably capitalizing on things because you called your shot right during the bear cycle. And so then what happens is you laid some groundwork. You're like, hey, I think this thing is going to happen. I think this thing's going to happen.

And then you scale up the teams to meet that demand that happens during that case. So that almost naturally happens is that you invest more people. the bets that you made during the bear market scale up. And the Anchorage is no exception. I'm going to think, what's the crypto companies that are scaling up right now are doing that? But you have to do that in a way that you're ready for inevitable downturns. These things happen. Even within what appears to be a very positive geopolitical situation for the next several years, you still have to be thoughtful about not overdoing it and being ready if the market is going to turn. I feel like that's a very mid-answer. You've got to be careful.

you've got to be thoughtful, but that's generally the way that I think about it. That's totally spot on because it's really the companies that were forged during the hard times that end up reaping the reward when time start to get good. It'll be interesting to see if the four-year cycle stuff continues. And maybe it will because people will do crazy things and get over levered. But it just feels like the holder base for some of these assets is just getting so broad. I mean, we're talking about Bitcoin going into 401Ks potentially here at scale. So it'll be interesting to see if we do have those crazy pullback.

or if we're just scarred from all the three that we've had before? It's interesting to really think about if the stable coin thing happens and the stable coin scales to the way, say, the White House is hoping where it goes to trillions, what are the second order effects of that? I think one of the second order effects is that literally the chains that are settling those stable coins are going to do well as well, because they've got to settle somewhere, they've got to move somewhere. So that's a really interesting theme because right now we're in the situation where Bitcoin's

doing well, stable coins are doing well, alts are not having the greatest time. And it might be that a resurgence in some of those use cases is actually driven by the fact that a bunch of dollars come to system and come onto the chains. So that's one potential second order effect that we could see here. There are inevitably half dozen others that are going to be interesting, but that's one that I'm tracking and trying to pay attention to. Yeah, I think that's an astute one. The other one that I'm seeing as a potential second order effect here is if you were a large asset manager and you're running anything from a credit fund to a large secondaries fund, you're probably looking at the growth of stable coins and just dollar demand internationally. And you're saying, well, could this just be

a retail distribution for my products? And those assets are going to have to be on some chain. Someone's going to benefit at the base layer as well. So I think that'll be the next chapter if we can actually get a market structure bill is you'll probably see the Apollos of the world, the Blackstones of the world, just start to see this as just more distribution. Yeah, totally. And I think that's a large, especially for the credit funds, that they aren't dollars, but they almost rhyme with dollars in the world that people think about it. You've got like a stable coin, then money market fund, then the Apollo credit funds and others. And those are in many cases great products that are in many ways constrained by their distribution. And so crypto real is being a little help out there with liquidity distribution, I think is something that's going to be really interesting. to track and look at. Well, this has been great, Nathan. You guys have just been shipping so fast, and I'm really excited to see how the stablecoin stuff works. I think we're going to probably see some surprising names pop up as issuing stable coins on the Anchorage platform here in the next few months.

Where can we send people to learn more about the company, what you guys are doing? And I'm sure you're hiring. So where can we send folks? Sure. Yeah. People feel free to hit me up. My DMs are open on Twitter. I'm at Nathan McColley. And our website is Anchorage.com. We got a forum there. We respond to everybody who fills out that form. And so those would be the good place to start, either the Twitter or our website anchor.com. Well, we're super excited about what you're building. We're a happy customer. You guys have a great staff working on our account too. So appreciate all the work. And thanks for coming on again. Thanks so much for having me. I appreciate it. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about

Castle Island, visit castle island.V.C. To listen to all of our podcast episodes, please go to On the Brink-podcast.com or just click on the tab in our website. Thanks for listening.