The native asset of the stablecoin-focused crypto project Ethena (ENA) skyrocketed by more than 28% on Friday, ignoring a wider crypto market pullback.

The price surge materialized after the Arthur Hayes-backed decentralized finance (DeFi) project announced a new strategic partnership with Anchorage Digital, a federally chartered crypto bank.

The partnership aims to bring Ethena’s second stablecoin offering, USDtb, to the US under the regulatory umbrella of the recently enacted GENIUS Act, with Anchorage Digital issuing the asset domestically.

The new law, signed by US President Donald Trump last week, establishes a regulatory framework for stablecoins, cryptocurrencies pegged to the US dollar. The legislation requires each token to be fully backed by liquid assets such as cash or short-term US Treasuries.

USDtb is backed by institutional-grade tokenized treasury funds, including BlackRock’s BUIDL, a tokenized money-market fund designed to offer a stable value of $1 per token. BlackRock’s fund is built on the Ethereum (ETH) blockchain.

Says Guy Young, CEO of Ethena Labs,

“While we’ve already seen strong demand for USDtb, we expect GENIUS compliance to empower our partners and holders to confidently and significantly expand its use across new products and platforms. By partnering with Anchorage Digital – the only federally regulated crypto bank in the United States – we reinforce the foundation needed to continue scaling the product without compromising on speed, flexibility, or trust.”

Ethena’s native asset, ENA, is trading at $0.607 at time of writing and is up more than 56% in the past seven days.

By comparison, the overall crypto market cap is down more than 4% in the past 24 hours.

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Anchorage Digital, a crypto custodian and federally chartered bank, said it will start phasing out and direct institutional clients to convert USDC

and other stablecoins into rival token Global Dollar (USDG) in a sweeping move that drew criticism from industry players.

The firm released a “Stablecoin Safety Matrix” that ranks stablecoins based on regulatory oversight and reserve asset management on Tuesday.

Circle-issued USDC, which is the second-largest stablecoin with a $61 billion supply and is popular among institutions, was deemed no longer suitable under Anchorage’s security framework. Two other, smaller tokens, Agora USD (AUSD) and Usual USD (USD0), were also slated for removal. Stablecoins are cryptocurrencies with their prices tied to an external asset, predominantly to the U.S. dollar.

“Following our Stablecoin Safety Matrix, USDC, AUSD, and USD0 no longer satisfy Anchorage Digital’s internal criteria for long-term resilience,” Rachel Anderika, head of global operations at Anchorage, said in a statement justifying the decision. “Specifically, we identified elevated concentration risks associated with their issuer structures — something we believe institutions should carefully evaluate.”

“Anchorage Digital is focused on supporting stablecoins that demonstrate strong transparency, independence, security, and alignment with future regulatory expectations,” she added.

Stablecoin race heats up

The move came at a time when competition in the stablecoin market is heating up with global banks, payments firms and crypto companies jockeying for position in the rapidly-growing sector.

The U.S. Senate recently passed the GENIUS Act that aims to enact clear rules for the asset class and issuers, which could open the gates for broader adoption. On Friday, White House crypto czar David Sacks suggested that the bill may become law as soon as next month, pending passage in the House of Representatives.

Reports by Citi and Standard Chartered reports projected the asset class to grow from the current $250 billion to trillions through the next few years. Circle (CRCL), the company behind the USDC token, recently went public and skyrocketed in valuation.

Anchorage gave USDC a score of 2 out of 5 for regulatory oversight and reserve management. The report said there was “no substantive prudential oversight” and that Circle had a large — about 15% — amount of its reserves held in cash at banks. Notably, USDC depegged temporarily in March 2023 when partner bank Silicon Valley Bank went under. Tether’s USDT, the world’s largest stablecoin, had a higher rating with Anchorage pointing to it being regulated in El Salvador.

S&P Ratings rated USDC “strong,” its second-best rating in its stablecoin stability assessment. Bluechip, a crypto-native stablecoin rating firm, gave USDC a B+ rating in its economic safety rating.

Industry leaders push back

Anchorage’s decision met with fierce pushback.

Nick Van Eck, whose firm Agora issues AUSD, accused Anchorage of misrepresenting facts about his stablecoin and failing to disclose its commercial interest in Global Dollar. USDG is issued by Paxos and is backed by a consortium of firms that share the income from the reserve assets backing the token. Anchorage is a founding partner in that consortium.

“If Anchorage had just delisted USDC and AUSD to prioritize the stablecoins that they have an economic interest in, I would understand it as a business decision,” he said in an X post. “But attempting to delegitimize AUSD and USDC for ‘security concerns,’ while knowingly publishing false information, is unserious and bizarre.”

“Never seen such an obvious hit piece be so poorly executed,” said Viktor Bunin, protocol specialist at digital asset exchange Coinbase. Coinbase jointly launched USDC with Circle in 2018, and shared revenue from the reserve assets backing the token.

Jan Van Eck, father of Nick Van Eck and CEO of asset manager Van Eck, which manages AUSD’s backing assets, also questioned the risk assessment.

“If you need a laugh, check out this ‘safety’ matrix before Anchorage pulls it down. According to the matrix, Circle’s USDC (world’s second largest stablecoin) and AUSD (backed 100% by treasuries) have reserve issues,” he posted on X. “Oh, and by the way, AUSD’s reserve manager is regulated by umpteen different regulators.”

Circle, in a statement sent to CoinDesk, defended the firm’s “long-standing compliance record” and “strong reputation as an industry leader.”

“We comply with the prevailing U.S. regulatory standards that apply to leading fintech and payments firms, and we were the first stablecoin issuer to achieve full compliance with the European Union’s landmark crypto law,” a Circle spokesperson said. “USDC is 100% backed by fiat-denominated reserves and has robust primary liquidity through a well-developed network of banks, representing what we view as the highest levels of transparency, safety, and operational resiliency in our industry.”

Support came for Circle and Agora outside of the two stablecoins’ camp.

“For the record, BitGo is not dropping USDC support,” said Chen Fang, chief revenue officer at crypto custodian BitGo.

“Agora and Circle are long-standing partners of ours, and our customers count on safe, transparent rails for USD settlement,” said Joshua Lim, co-head of markets at crypto prime broker FalconX, adding that his company “is ready to support clients using AUSD and USDC.”

A high-profile CEO in the crypto space reportedly says that an American bank suddenly decided to shut the company out from banking services, supporting previous rumors of “de-banking” in the digital asset industry.

Anchorage Digital CEO Nathan McCauley says that a bank – who is yet to be named – essentially turned off their bank account for unexplained reasons after two years of working with the lender, reports CNBC.

“Our story is pretty ridiculous… We had a bank that we had a growing relationship with for a number of years, who basically on a dime, decided to turn off our bank account.”

McCauley didn’t mention the name of the bank and a spokesperson for Anchorage declined to provide any other details with CNBC.

The CEO says the bank cut them off in June of 2023, around the same time that numerous reports of “Choke Point 2.0” – or a coordinated effort by the government to shut down the crypto industry – were running rampant.

Says McCauley,

“You can only imagine what was happening to the smaller entrepreneurs who didn’t have the resources to be able to marshal in order to keep their bank accounts open.”

Last month, US Senator Cynthia Lummis (R-WY) said she wants the Federal Deposit Insurance Corporation (FDIC) to secure materials that could be related to the government’s alleged efforts to de-bank crypto firms.

In a letter to FDIC chair Marty Gruenberg, Lummis said whistleblowers claim that the deposit insurer is destroying materials linked to its digital asset activities.

The senator said the FDIC’s alleged efforts to destroy and conceal materials related to Operation Choke Point 2.0 are unacceptable and illegal.

“If it is uncovered that anyone within the FDIC has knowingly destroyed materials or sought to obstruct the oversight functions of the Senate, it will result in swift criminal referrals to the U.S. Department of Justice. The American people deserve transparency, and I will see to it that they get the answers they deserve.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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