Anchorage Digital is making waves in the crypto world with its latest move: introducing a rewards program for clients who custody PayPal USD (PYUSD) stablecoins with the digital asset custodian. Announced on August 22, this new initiative promises to enhance the appeal of Anchorage’s custody services by offering additional incentives for holding PYUSD.
What’s the Deal with the New Rewards Program?
This rewards program marks a pioneering step for Anchorage Digital, applying specifically to clients who store PayPal USD (PYUSD) with Anchorage or use its self-custody solution, Porto. The stablecoin, which was introduced by PayPal in 2023, is pegged 1:1 to the US dollar and issued by Paxos Trust Company, a regulated crypto custodian.
“PYUSD remains fully accessible and segregated in participants’ accounts on-chain, ensuring swift deployment,” Anchorage stated. “Crucially, this program allows clients to earn rewards without engaging in rehypothecation, staking, or lending.”
With stablecoins like PYUSD offering advantages over traditional fiat currency—including programmability, ease of transfer, and the ability to self-custody—they’re gaining traction, particularly for global remittances. As an ERC-20 token on the Ethereum blockchain, PYUSD benefits from broad accessibility among developers, wallets, and Web3 applications.
How Does It Stack Up Against Competitors?
Coinbase, a notable competitor in the institutional custody space, is also incentivizing users to hold stablecoins on its platform. Coinbase currently offers approximately 5.2% annual percentage yield on USD Coin (USDC), another popular dollar-backed stablecoin. Coinbase’s stake in Circle, the issuer of USDC, underscores its commitment to promoting stablecoin adoption.
Anchorage Digital’s new rewards program comes at a time when regulated digital asset custodians are becoming increasingly prominent in the US. In February, Anchorage launched Porto as a self-custody option tailored for venture funds and sovereign wealth funds, adding to its array of services.
The Growing Landscape of Regulated Custodians
The regulatory landscape for digital asset custodians is expanding, with other major players also making strides. For instance, Fireblocks recently gained approval from New York’s financial regulator to offer custody services for US clients. Similarly, companies like Coinbase Custody Trust, Fidelity Digital Asset Services, and PayPal Digital are among those licensed to provide institutional crypto custody solutions.
“Crypto innovators are eager to optimize their treasury cash but cannot afford to compromise on security or accessibility,” said Nathan McCauley, CEO of Anchorage Digital. “This new rewards program is designed to meet those needs while offering an attractive return on stablecoin holdings.”
Looking Ahead
Anchorage Digital’s introduction of a rewards program for PayPal USD holders is a significant development in the realm of institutional crypto custody. By offering rewards without the need for rehypothecation or complex financial maneuvers, the platform is positioning itself as a leader in secure and innovative asset management.
As the competition heats up among custodians and stablecoin providers, Anchorage’s latest initiative is set to draw attention and potentially influence other players in the space. Keep an eye on how this new program shapes up and whether it inspires similar moves from competitors in the ever-evolving world of digital assets.
