During a tense Senate Banking Committee hearing on Tuesday, in which Facebook blockchain lead David Marcus was skewered over the social media company’s ambitious Libra project, Sen. Mike Rounds (R-S.D.) started his remarks with a brief announcement:

“Mr. Marcus, thanks very much for appearing here before us today. Before I begin my questions, I just want to take a moment to commend the South Dakota Division of Banking for their forward-thinking and willingness to allow for innovation in the digital currency space. Another founding member of the Libra Association, Anchorage, just received permission from the Division of Banking to become a South Dakota chartered trust company.”

Observers may have found it odd given the tenor of the hearing, but indeed, Rounds had it right. “Anchorage, which is a Silicon Valley crypto startup,” he said, “has chosen to open its second headquarters in Sioux Falls.”

Amidst the fear, uncertainty and doubt hanging over the hearings, Anchorage was improbably enjoying its moment in the sun.

The startup recently raised a $40 million Series B on the promise of crypto custody services for institutional investors that are “both more secure and more usable.” Anchorage’s technology avoids the traditional dichotomy of internet-connected hot wallets and offline cold storage in favor of specialized hardware security modules (HSMs). The company’s custom HSMs “will process a given transaction only when certain criteria are met,” according to a company blog post from April.

In June, Anchorage also snagged a seat at the table of the Libra Association alongside some of the world’s most powerful brands. (Anchorage investors Andreessen Horowitz and Visa are also founding members of Libra’s initial 28-company consortium.)

CoinDesk spoke with Anchorage CEO Nathan McCauley the day after the Senate hearing about why shopping jurisdictions made sense and what the benefits of launching a subsidiary in South Dakota are expected to be.

While Wyoming is perhaps the most notable state to court the crypto industry, others have also joined in. Montana passed a crypto-friendly securities law in May. In South Dakota, Anchorage is following in the footsteps of fellow crypto custodian BitGo, which got the green light from state regulators in 2018.

Below is an edited transcript of our discussion.

The cost of living is among the lowest in the U.S. and there are no income taxes, but are there specific reasons you selected South Dakota for your new Anchorage Trust subsidiary?

South Dakota knows trust administration, and that kind of institutional memory means abundant access to legal counsel, auditors, office space and talent. There were others states we talked with where a trust company hadn’t been created in over a decade, and “over a decade” was considered recent.

From top to bottom the state is really interested in seeing innovation happen. The South Dakota Trust Charter allows companies to operate on a national level so you can serve clients from every state. There is regulatory clarity that allows crypto natives to increase yields for clients through baking, staking and other kinds of participation. And surprisingly, South Dakota is one of the largest holders of assets in the country, more than $3 trillion, according to the FDIC, three times the size of New York, second only to Ohio.

It’s also a really nice business climate. We’re hosting a ribbon-cutting ceremony in a few weeks and the local chamber of commerce is helping put it together.

How long did it take to get the charter?

We were motivated to do it quickly because from the get-go we knew we wanted to be a qualified custodian for our institutional-investor clients. Initial contact was late December. We met with the Division of Banking three or four days before Christmas and we received our charter on July 16, so it took six, seven months.

Who else is part of the South Dakota crypto community?

BitGo and Kingdom Trust are here as well.

What challenges do you foresee at the federal level?

SEC broker-dealer guidance continues to be a work in progress. We’re in good shape because of our licensure but more regulatory clarity is needed for the industry.

Any plans to expand internationally?

Right now our focus is on the United States because the U.S. remains the center of gravity for institutional investment, but we’re open to conversations with folks from the EU and Asia as many of them are interested in working with a U.S.-based custodian.

You recently deepened your ties with fellow Libra Association members Visa and Andreessen Horowitz, which are both investors in your Series B round. What are you most excited about going forward?

The investment from Visa is an important part of our story because it speaks to the kind of investor we’re attracting and the growing interest in cryptocurrency. It’s also very exciting that social networks like Facebook are getting involved in cryptocurrency to make financial services available to a larger portion of the population in a user-friendly way.

We’re just thrilled to be part of it.

Image: Anchorage Trust Officer Jim Benham, General Counsel Katie Biber and CEO Nathan McCauley pose in front of the South Dakota Division of Banking (courtesy of Anchorage)