Originally published on: December 05, 2024
Anchorage Digital has made history by becoming the first federally chartered bank in the United States to support liquid Ether (ETH) staking, the company announced on Dec. 5.
The cryptocurrency bank has integrated support for Liquid Collective’s Liquid Staked ETH (LsETH), a liquid staking token (LST) that represents ETH staked on the Ethereum blockchain, Anchorage Digital revealed.
This new offering is aimed at servicing US institutions, including venture capital firms, wealth managers, and blockchain protocols, directly from their Anchorage Digital accounts.
By facilitating participation in liquid staking, Anchorage Digital Bank NA becomes the first US-regulated bank to support this innovative solution, setting a new standard in the industry.
Institutional staking solutions have been in high demand as anticipation grows for the possible approval of staking in US ETH exchange-traded funds (ETFs).
Analysts believe that US ETH ETFs may soon incorporate staking yield, particularly under a more crypto-friendly regulatory environment.
Staking involves securing ETH as collateral with a validator on the Ethereum network, earning ETH payouts from network fees and rewards. However, stakers also face the risk of “slashing” if the validator acts improperly.
According to Staking Rewards, stakers on Ethereum can currently earn around 3.5% APR in ETH.
Liquid Collective, specializing in minting LSTs for institutions, emphasizes regulatory compliance and cybersecurity. The protocol implements KYC and AML checks and uses institutional node operators like Coinbase and Figment.
With more than $70 billion in total value locked (TVL), LSTs have gained popularity in the decentralized finance (DeFi) space. The most prominent player is Lido, boasting nearly $40 billion in TVL.
Liquid Collective, while smaller with around $430 million in TVL, offers a tailored solution for institutions seeking to participate in liquid staking.
This groundbreaking move by Anchorage Digital underscores the growing importance of digital asset custody in the United States, with entities like Fireblocks, Coinbase Custody Trust, and Fidelity Digital Asset Services leading the way.
As the DeFi landscape continues to evolve, liquid staking presents a promising opportunity for institutional investors looking to diversify their portfolios and optimize their returns in the crypto market.
