Crypto Exchange With Wall Street Backing: Citadel Securities, Fidelity, Schwab Enter The Fray

EDX Markets, a new crypto exchange backed by several Wall Street tycoons, including Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, and Virtu Financial, has started operations.

The exchange, launched in September, currently allows trading of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.

Crypto Exchange Launches With A Bang

What sets EDX apart from other exchanges is that it is a “noncustodial” exchange, meaning it does not directly handle its customers’ digital assets. Instead, EDX runs a marketplace where firms agree to execute trades of coins and dollars, using its platform to agree on prices. Then the firms move digital assets and cash between each other to settle the trades.

This is in contrast to other exchanges, which typically require their customers to park their digital coins in wallets run by the exchange, creating the risk that the exchange could lose the funds or be tempted to misuse them.

The move to create a noncustodial exchange comes after the Securities and Exchange Commission (SEC) recently sued both Binance and Coinbase, two of the largest crypto exchanges in the world.

SEC Chairman Gary Gensler has repeatedly said that most cryptocurrencies are securities and should fall into the agency’s jurisdiction. At the same time, Bitcoin is the only crypto he is comfortable labeling as a commodity.

EDX’s decision to launch a noncustodial exchange is a significant step forward for the industry, as it seeks to address concerns around security and regulatory compliance. The exchange plans to launch a clearinghouse to facilitate settling trades later this year, but even then, it plans to use third-party banks and a crypto custodian to hold customer assets.

The recent funding round for EDX, which included Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology, is a testament to the growing interest in the industry from traditional financial institutions. It is clear that Wall Street heavyweights are increasingly recognizing the potential and are keen to be a part of its growth.

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Author: Ronaldo Marquez

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