Anchorage Digital Acquires Mountain Protocol as USDM Stablecoin Begins Shutdown

Anchorage Digital is acquiring Mountain Protocol as the USDM stablecoin begins its planned shutdown.

The firm, the first federally approved bank in the cryptocurrency sector, announced Monday that it decided to move forward with the acquisition in alignment with Mountain’s decision to “commence the orderly winddown of USDM.”

According to the announcement, Anchorage aims to strengthen its institutional stablecoin capabilities through the deal, the terms of which were not disclosed.

“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,” CEO Nathan McCauley said in a statement.

Stablecoin regulation efforts in the U.S. have slowed after a failed vote in the Senate, but both legislative proposals still aim to give traditional banks a more central role in handling fiat-backed digital currencies.

“Stablecoins are becoming the backbone of the digital economy. With recent regulatory progress and new institutional use cases, our long-term vision is clear: every business will be a stablecoin business,” McCauley added.

The move comes as several crypto firms have been testing the boundaries of regulatory leniency with new stablecoin projects and integrations.

“This partnership combines Anchorage's industry-leading crypto infrastructure and deep regulatory experience with Mountain Protocol's best-in-class stablecoin technology and licensing system, enabling the merged entities to meet the surging global demand for institutional-grade stablecoin services,” said CEO Martin Carrica.

On May 12, Mountain Protocol announced that it would be shutting down minting of its stablecoin and that it had begun the process of winding down operations. It also stated that USDM yield rewards would continue for the next 30 days before the APY adjusts to 0%.

The stablecoin issuer advises customers who hold USDM in its system to redeem the tokens through its platform, while those who hold USDM on exchanges can exchange their tokens for other cryptocurrencies.

Carrica and Matias Caricato founded the startup, which had raised $12 million in funding. Anchorage will be adding Mountain Protocol’s team, technology and licensing system to its own operations.

RWA.xyz reports that Mountain Protocol’s USDM reached a $155 million market cap by March 2024 following its launch in late 2023.

However, the market cap has since dropped significantly and is now below $50 million.