A new crypto exchange EDX Markets launched

A new crypto exchange EDX Markets launched

Time Stamp: June 22, 2023 9:56 AM
A new crypto exchange EDX Markets launched PlatoBlockchain Data Intelligence. Vertical Search. Ai.
  • EDX Markets is a new crypto exchange designed to meet both the needs of native digital assets firms and the largest financial institutions globally.
  • The US Securities and Exchange Commission (SEC) recently amplified its regulatory crackdown on the crypto industry through lawsuits against two of the largest firms, Binance and Coinbase.
  • The new crypto exchange will operate as a platform to connect a network of firms to execute and settle trades between cryptocurrencies and fiat currencies.

EDX launch

A new crypto exchange backed by firms including Fidelity Digital Assets, Charles Schwab Corp. and Citadel Securities has confirmed that it has gone live. This launch could reshape the digital-asset landscape amid heightened regulation and scrutiny of the cryptocurrency sector.

EDX Markets is a new crypto exchange designed to meet both the needs of native digital assets firms and the largest financial institutions globally. The creators of EDX intended to enable faster, safer, and more efficient cryptocurrency trading, leveraging best practices from traditional financial markets on a purpose-built platform.

EDX Markets, an institutional-only exchange first announced in September 2022, will offer trading in four cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. The new crypto exchange offers a “non-custodial” model of trading. Thus, this exchange does not hold customers’ digital assets during trading. Instead, EDX Markets will work with a third-party custodian, according to Chief Executive Officer Jamil Nazarali, unlike existing crypto platforms, including the embattled Coinbase Global and Binance Holdings.

Recently, crypto regulators have required that crypto exchanges stay clear of broker-dealer functions, similar to the traditional financial markets infrastructure. This shift will create opportunities for EDX Markets, Nazarali said.

“We believe crypto is here to stay, but for it to evolve as an asset class, it needs to adopt the rules and investor protections that exist in traditional finance,” Nazarali said in an interview. “Our investors’ message is that this creates an even bigger space for us.”

EDX Markets, initially backed by companies including Sequoia Capital, Virtu Financial, and Paradigm, raised new funding through additional investors, including HRT Technology GTS, GSR Markets, and Miami International Holdings. It plans to launch EDX Clearing to settle trades later this year.

READ MORE: Blockchain Breakthrough: African banks embrace the future of finance

EDX Market launch at a time of “crypto turmoil”

The US Securities and Exchange Commission (SEC) recently amplified its regulatory crackdown on the crypto industry through lawsuits against two of the largest firms, Binance and Coinbase, claiming they acted as unregistered broker-dealers, clearinghouses, and securities exchanges. The firms have denied the allegations.

SEC Chair Gary Gensler has long criticised existing crypto exchanges and platforms for failing to separate different parts of their businesses, including custody, market-making and crypto trading, which could create conflicts of interest.

Institutional interest in crypto investing has declined after the industry underwent a market crash and high-profile exchanges, including FTX, collapsed in 2022. Nevertheless, some traditional financial institutions have continuously laid the groundwork to get involved in the crypto markets.

BlackRock, the largest asset manager globally, applied last week to launch a spot Bitcoin exchange-traded fund. The asset manager will become the first Bitcoin exchange-traded fund (ETF) spot. Despite recent industry setbacks and regulatory concerns, this indicates sustained institutional interest in the long-term crypto market.

Why the new crypto exchange is different

EDX’s platform has evaded the “crypto asset securities” targeted in recent lawsuits by the SEC against Binance and Coinbase. By positioning itself as a “non-custodial” exchange, EDX Markets focuses on the needs of major financial institutions seeking crypto exposure but holding reservations concerning centralised crypto service providers.

A non-custodial platform does not hold its customers’ crypto-tokens. Instead, it ensures that third-party banks act as custodians, and control assets, removing any concerns regarding potential fund misappropriation. For instance, Coinbase serves as a custodian for their customer’s crypto, unless in cases where they opt for a self-custody wallet.

While it is easy for customers to start trading crypto with an exchange that holds their tokens, risks include losing assets in case platforms get hacked or lower profits arise from custodial fees.

The new crypto exchange will operate as a platform to connect a network of firms to execute and settle trades between cryptocurrencies and fiat currencies. However, it will not help settle those trades as yet. EDX Markets hopes to launch a clearinghouse business later in the year to allow for carrying out assets’ settlements.

Read more: The Rise of a new dawn: Blockchain technology adoption in Africa

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