[DigitalToday reporter Yoonseo Lee] Anchorage Digital has launched a payment platform that lets institutional investors trade on crypto trading platforms while keeping their assets deposited at a regulated bank.

Cointelegraph, a blockchain media outlet, reported on Sunday that the platform focuses on reducing the practice of pre-funding at exchanges to lower counterparty risk and operational risk.

Anchorage Digital said its new platform, Coordinated Multiparty Settlement (CMS), is designed to keep assets held at Anchorage Digital Bank throughout the entire trading process. The structure connects exchanges, prime brokers and institutional clients through a shared settlement layer. Assets remain at a federally regulated bank even when trading takes place on an external platform.

CMS verifies participants' funding obligations and coordinates the settlement process. It can reduce the number of asset movements needed to complete trades. The key function is to lower the need for pre-funded accounts, which are common in crypto markets.

In a post on X, formerly Twitter, Anchorage pointed out that a significant portion of crypto trading currently takes place on offshore platforms, where a single platform serves as the exchange, custodian and settlement agent. It said client assets are often commingled and titles are often held in the name of the exchange. CMS, it said, focuses on strengthening institutional clients' control of assets by separating custody and settlement from that structure.

Under the CMS system, a prime broker manages client balances and credit relationships. The trading platform acts as the matching engine, and Anchorage Digital is responsible for custody and settlement. The structure aims to reduce the burden on institutions of having to pre-allocate assets to counterparties and exchanges.

Deployment will begin on the foreign exchange trading platform Spotex. Anchorage Digital said Spotex processes trades worth several billion dollars a day. It is also developing additional platform integrations.

CMS appears to target demand from institutions that want to separate asset custody and settlement while continuing to use exchanges. Initial integrations are limited, but if additional platform connections expand, settlement methods for institutional crypto trading could also change.

Anchorage Digital's CMS is an example of reworking institutional trading structures by separating trading functions from asset custody functions. As an effort to reduce the pre-funding practice in crypto markets, it shows that competition in institutional digital asset infrastructure is expanding into custody and settlement.

We’re building a new foundation for crypto market structure. Today, much of crypto trading takes place offshore. A single platform acts as exchange, custodian, and settlement agent. Assets are commingled, and titled to the exchange. This keeps institutions on the sidelines. pic.twitter.com/cUPJpbJXRk