Anchorage, the U.S domiciled crypto custodian, announced that it had obtained a SOC 1 Type 1 report having completed an assessment. This audit was done by Ernest & Young (EY), one of the big four auditors in the world. According to Anchorage’s announcement on Nov 10, the milestone will be a big boost to its value proposition as a digital asset custodian that deals with other institutions, including financial service providers.
Basically, the SOC 1 Type 1 report entails assessing a company’s support ecosystems to ensure robust financial reporting mechanisms and internal operating systems. In the case of Anchorage, E&Y also looked into the control of private keys; an area where Anchorage’s Head of Compliance Jennifer Lee, expressed confidence on,
“What sets the Anchorage report apart is a heavy emphasis on our ability to prove exclusive control, confidentiality, and availability of private keys.”
The SOC 1 Type 1 report is not a walk in the park; this approval is only granted after the attestation of a qualified third party such as E&Y. With Anchorage receiving this report, the crypto custodian has further increased its mark of excellence as a financial services provider. Per the announcement blog, they were confident of this position but are now better placed with a formal confirmation by E&Y,
“Completing this examination and being granted the SOC 1 Type 1 report more formally signifies something we have long known: the controls and processes Anchorage has developed are world-class and meet a truly rigorous standard.”
In the future, the firm plans to complete SOC 1 Type 2 assessment, which is more rigorous and done over time than a one-time review. Anchorage also indicated that it would retain E&Y to be its third-party auditor in the type 2 evaluation, as it strives to increase standards in compliance reporting and support for internal systems. Cryptocurrency exchanges Gemini and Coinbase have also completed these assessments.
Notably, this crypto custodian has quite a bullish fundamental year, expanding into the burgeoning Decentralized Finance (Defi) niche. The firm’s collateral management services have also grown significantly through a major partnership with Silvergate bank to provide crypto-pegged loans to institutional clients. With a SOC 1 Type 1 report, Anchorage is optimistic about creating a more trustable crypto custodial ecosystem.