The Role of Anchors In The Stellar Network

The Stellar Network is an excellent, futuris-current resource for sending money across borders effortlessly. Or at least, it feels effortless — largely thanks to anchors. 

In this post, we will be looking at Stellar anchors, how they work, and how your business can become one. 

What is an anchor?

First, let’s define what a Stellar anchor is. For those who don’t know, a Stellar anchor is a bridge between fiat money (local currency) and a representation of that money as an asset in the network.

Stellar anchors act as on and off-ramps to the Stellar Network. They accept deposits of fiat currencies via existing methods, like bank deposits, and send users the equivalent amount of digital tokens that then represent those deposits on the Stellar network. 

Some of the largest anchors in the Stellar network right now are MoneyGram, Settle, and Tempo.

What anchors do: Three core functions

Now that you know what a Stellar anchor is, let’s explore what these anchors do. Below is a breakdown of how anchors facilitate transactions for Stellar users. 

1. Serve as a connection to the outside world

Anchors serve as a conduit to the outside world. If the Stellar network is a walled garden where transactions are allowed to occur, the anchor points are gateways to that garden. 

Anchors exist to expand access to the Stellar network and let anybody use the network. This includes unbanked individuals. Anchors let people access the network with external assets, which lets them interact with the banking ecosystem. 

This also means that there’s a level of responsibility involved in being a Stellar anchor because anchors need to provide legitimate and reliable access to the Stellar network. This matters especially for underbanked populations.

A user without a bank account in a country with a strong mobile money ecosystem can use an anchor that accepts mobile money on-ramps. Once on-network, they can receive remittances in any currency from anywhere in the world.

2. Digitally represent fiat currency

These anchors can digitally represent fiat currency. For those not aware, fiat currency is a reference to traditional currencies, like the U.S. dollar. 

Unlike other cryptocurrencies, which act as independent storage of value, Stellar is meant to only serve as a medium of exchange.

Its purpose is to transfer real-world currencies using digital representations of that cash. So your fiat currency becomes a digital asset, is moved through the Stellar network, and then becomes a fiat currency once more when it’s delivered to the recipient. 

Anchors are what make this digitization possible because they do the digitization in both ways: from fiat to digital currency, and from digital currency to fiat. 

3. Create network ecosystem effects.

And anchors work together to create the Stellar network ecosystem. Each individual anchor can accomplish the above functions, but all of the anchors integrate and work together to leverage access to the network. 

This network allows users to connect traditional currencies, and exchange them — all while supporting Stellar’s growing set of features. Plus, the more assets there are present in the network, the more conversion rates can be optimized.

So, having more anchors acting as gateways to the network for more people and more assets is a great way to support the growth of the Stellar network.

A user sending money from Japan to Nigeria does not need a direct JPY-NGN anchor. Stellar’s pathfinding can route through XLM or USDC as an intermediate asset, using whatever liquidity pools and anchor pairs provide the best rate. More anchors across more currencies make this routing more efficient and more competitive.

Issuing fiat tokens and creating a digital counterpart for a fiat currency

If you know anything about cryptocurrencies, you know that they’re not too stable.

And with that in mind, you may be wondering how you can convert a fiat currency to a cryptocurrency without the value wildly fluctuating. Anchors can issue fiat tokens in the Stellar network to accomplish this.

A fiat token, a.k.a. a “stablecoin,” is a cryptocurrency token that won’t fluctuate in value — or at least, anchors implement mechanisms to ensure it fluctuates in rhythm with its fiat counterpoint.

It’s a one-to-one relationship. Since this fiat token exists within the Stellar Network, it can interact with the functionalities that make Stellar so powerful.

This allows consumers and businesses to transfer money across borders instantly, send money from one currency and have it arrive in another, and (soon) even execute smart contracts with their cash. 

The token issuance process follows the Stellar Classic asset model:

1. The anchor creates an Issuing account on Stellar and defines the asset. For example, USDX issued by the anchor’s Issuing account address.
2. Users who want to hold the token create a trustline to the anchor’s Issuing account.
3. When a user deposits fiat, the anchor sends a payment from the Issuing account to the user’s wallet — minting the tokens into circulation.
4. When a user redeems, the anchor sends a payment from the user’s wallet to the Issuing account, burning the tokens and reducing circulating supply.

Enabling on/off-ramp of fiat currency

Remember how we mentioned that anchors act as gateways to the Stellar Network? Those gateways are what’s known as on/off-ramps. 

These “ramps” let Stellar users exchange a fiat currency for that currency’s counterpart in Stellar tokens. This is what happens when a user uses the on-ramp.

When users use the off-ramp, their Stellar tokens are converted back to their fiat currency or another fiat currency of their choosing. 

How do anchors connect?

Now that we know how anchors function, let’s talk about how they connect. After all, it’s the connections that make anchors so powerful. Here’s a quick breakdown. 

SEP-1 – Stellar TOML

The anchor publishes a .well-known/stellar.toml file at its domain, declaring its supported assets, endpoint locations, organizational information, and any other metadata wallets and applications need to interact with it. This is the anchor’s public declaration of its presence in the ecosystem.

SEP-10: Stellar Web Authentication.

Before a user can interact with an anchor’s services (deposit, withdraw, KYC), they must prove ownership of their Stellar account. SEP-10 defines a challenge-response authentication protocol using the Stellar account’s private key, a standard that wallets implement once and use across all SEP-10 compliant anchors.

SEP-12 – KYC API.

Regulated anchors must verify customer identity before processing transactions above certain thresholds. SEP-12 defines the API through which anchors collect KYC information from users. Wallets that implement SEP-12 can present a unified KYC collection flow to users, with the collected data transmitted securely to the anchor.

SEP-6 – Deposit and Withdrawal API

A programmatic API for depositing and withdrawing through the anchor. Used primarily by institutional users, automated systems, and wallets that want to offer anchor services without redirecting users to a web interface. SEP-6 integration enables anchor services to be embedded directly in the wallet’s native UI.

SEP-24 – Interactive Deposit and Withdrawal

The standard for consumer-facing anchor interactions. The anchor hosts a web application that guides users through the deposit or withdrawal flow — selecting amounts, entering bank details, completing KYC if required, and confirming the transaction. The wallet opens the anchor’s web flow in a secure WebView and monitors for completion. This is the most common integration pattern for consumer wallets.

How to become a Stellar anchor

If you’re wondering how your business or institution can become a Stellar anchor, you’re not the only one.

There are a lot of benefits, including the knowledge that you’re contributing to a budding network of collaboration, competition, and innovation. There are a few key things you need to know about becoming a Stellar anchor.

There are several standards you need to follow

Depending on what services you want to provide as an anchor, you’ll have to follow different standards and protocols.

They can be analyzed in more detail with the Stellar Ecosystem Protocols (SEPs), which define how different institutions should interact and interoperate. 

Anchors also need to comply with local regulations in every location where their services are available.

Anchors need to comply with regulatory, registration, and licensing obligations for financial transactions, data privacy regulations, industry-standard cybersecurity practices, and any anti-money laundering regulations. In addition to local regulations, anchors need to comply with US sanctions. 

Step 1: Regulatory and legal setup

Anchor operations constitute money transmission in most jurisdictions. This requires obtaining the appropriate license — a Money Services Business registration in the US, an Electronic Money Institution license in the EU under MiCA, or equivalent in your target markets. US sanctions compliance (OFAC) is a universal requirement regardless of jurisdiction. This step takes months and should be started first.

Step 2: Banking and reserve management

You need a banking relationship capable of holding fiat reserves segregated from operating funds, receiving deposits through local payment rails, and disbursing withdrawals. The banking relationship is often the hardest part for crypto-adjacent businesses — traditional banks frequently decline to provide banking services to entities operating in the digital asset space.

Step 3: Technical implementation.

With regulatory and banking infrastructure in place, the technical setup follows:

• Create Issuing and Distribution accounts on Stellar Mainnet
• Configure authorization flags (clawback, authorization required, etc.) based on your regulatory requirements — these must be set at asset creation
• Implement SEP-1 (TOML) to declare your anchor’s presence
• Implement SEP-10 (authentication) and SEP-12 (KYC) as the prerequisite layer
• Implement SEP-24 (interactive) and/or SEP-6 (programmatic) based on your user base
• Deploy and configure the Anchor Platform (SDF’s open-source reference implementation covers the SEP compliance layer)
• Integrate with local payment rails on both the deposit and withdrawal sides
• Build operational tooling for monitoring transactions, handling exceptions, and managing the reconciliation between on-chain supply and off-chain reserves

Step 4: Testing and compliance validation

Test on Stellar Testnet first. Run a full deposit-and-withdrawal cycle through every payment method you intend to support. Validate your KYC flow, your compliance screening, and your error handling for edge cases (failed payments, partial deposits, network congestion). Get a legal review of your compliance program before going live.

Step 5: Listing and ecosystem integration

Submit to Stellar’s anchor directory. Reach out to the major Stellar wallets (Lobstr, Solar, Freighter) for integration. Engage with the Stellar Development Foundation — SDF actively supports new anchors through the Stellar Community Fund (SCF), which awards up to $150,000 in XLM for qualified projects.

Step 6 (optional): Soroban integration

If your regulatory environment, product requirements, or institutional partners require programmable compliance, automated reserve attestation, or DeFi composability, add a Soroban layer on top of your Classic anchor. This is not required for most anchors — but it is the direction the institutional end of the market is moving.

You’ll need to manage fiat assets

Since anchors act as an on and off-ramp to the Stellar Network for fiat currency, anchors need to be able to manage incoming and outgoing fiat assets as well as their digital counterparts.

Fiat assets need to be processed through local domestic payment rails and not via wire transfers. And all deposits and withdrawals need to follow the Stellar ecosystem standards.

This helps ensure interoperability between wallets and anchors network-wide. 

Getting technical support 

Becoming a Stellar anchor and leveraging the network capabilities of your business is definitely something that you can set up on your own, but you’ll need some technical know-how to get going.

Thankfully, Stellar has a great community more than willing to help you navigate the process. 

If you’re interested in becoming an anchor but don’t have the in-house expertise it might be a good idea to partner with an expert.

Working with a partner means you’ll have help setting up the anchor infrastructure and making sure you’re adhering to the appropriate SEPs and leveraging the right Stellar network features to your business.

What this means for builders

The anchor network is mature and institutionally adopted in 2026. The technical standards are stable. The tooling is well-documented. The SDF’s Anchor Platform handles the SEP compliance layer, so builders can focus on the payment rail integrations and regulatory requirements specific to their markets rather than rebuilding standards from scratch.

For builders evaluating Stellar for a cross-border payment product, a remittance corridor, a stablecoin issuance platform, or a digital wallet with fiat on/off-ramp. The anchor model is the fastest path to production without building correspondent banking relationships from scratch.

At Cheesecake Labs, we are a Stellar Development Foundation partner. We have built anchor infrastructure, stablecoin issuance platforms, and SEP-compliant wallet integrations for clients including MoneyGram International. Talk to our team if you are building on Stellar or evaluating the anchor model for your product.