Anchorage Digital, the only federally chartered digital asset bank in the U.S., has acquired Mountain Protocol in a strategic move to expand its stablecoin services, while Mountain's primary stablecoin USDM will be discontinued, the company announced Sunday.
What to Know:
- Anchorage Digital will integrate Mountain Protocol's team, technology and licensing framework into its existing operations
- Mountain Protocol has stopped minting new USDM tokens and will maintain rewards for 30 days before reducing rates to 0%
- The acquisition reflects an accelerating trend of mergers between traditional finance and cryptocurrency companies
The deal, subject to customary closing conditions and regulatory approval, comes amid growing institutional interest in digital payment solutions and represents Anchorage's latest move to strengthen its position in the rapidly evolving stablecoin market. Financial terms of the acquisition were not disclosed in the announcement.
Stablecoins, cryptocurrency tokens designed to maintain a stable value by being pegged to assets like the U.S. dollar, have become increasingly important in digital finance. "Stablecoins are becoming the backbone of the crypto economy," Anchorage CEO Nathan McCauley said in the statement, adding that he anticipates "every business" will eventually incorporate stablecoins into their operations.
The acquisition builds on Anchorage's previous stablecoin initiatives, including a rewards program launched approximately nine months ago for institutions holding PayPal USD (PYUSD) stablecoin.
Mountain Protocol brings additional expertise to the table, operating under regulation from the Bermuda Monetary Authority, which complements Anchorage's U.S. federal charter.
Martin Carrica, Mountain Protocol's CEO, emphasized the strategic alignment between the companies. "Our stablecoin experience and Anchorage's crypto infrastructure positions the merging companies to meet the growing global demand for stablecoin services," Carrica stated in the announcement.
USDM Stablecoin Wind-Down Process
As part of the acquisition, Mountain Protocol has initiated what it describes as an "orderly wind-down process" for its yield-bearing USDM stablecoin. The company confirmed it ceased minting new USDM tokens on May 12, marking the beginning of the phase-out.
Current USDM holders will continue receiving rewards for 30 days, after which the annual percentage yield will drop to zero. Mountain Protocol has outlined redemption options for its customers, who can exchange their tokens directly through the company's platform.
Other USDM holders are being advised to swap their tokens for alternative cryptocurrencies through various exchanges.
The Ethereum-based USDM stablecoin, which should not be confused with Mehen Finance's similarly named token on the Cardano network, experienced significant growth shortly after its late 2023 launch. According to data from RWA.xyz, USDM reached a market capitalization of $155 million by March 2024, demonstrating initial market confidence.
However, recent months have seen USDM's market value decline substantially to below $50 million. Analytics platform RWA.xyz estimates approximately 10,820 individuals currently hold USDM tokens, all of whom will need to take action as the wind-down progresses.
The acquisition comes during a period of increased consolidation in the cryptocurrency sector, with multiple deals between traditional financial institutions and crypto-native companies being announced in recent months. This trend reflects growing mainstream acceptance of digital assets despite ongoing regulatory uncertainties.
Closing Thoughts
Anchorage Digital's acquisition of Mountain Protocol represents significant consolidation in the stablecoin sector, combining Anchorage's regulated banking infrastructure with Mountain's stablecoin expertise. As USDM winds down over the coming months, the merged entity appears positioned to develop new offerings in the increasingly competitive stablecoin market that continues to attract both institutional and retail interest.