A new crypto exchange called EDX Markets has begun operations with backing from several Wall Street tycoons, including Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, and Virtu Financial. The exchange, which was 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. This means that 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. The actual movement of digital assets and cash between firms to settle the trades is carried out by the firms themselves.
This is different from other exchanges, which usually require customers to store their digital coins in wallets provided by the exchange. This creates the risk that the exchange could lose the funds or misuse them.
The decision to create a noncustodial exchange comes in the wake of the Securities and Exchange Commission (SEC) suing two of the largest crypto exchanges, Binance and Coinbase. The chairman of the SEC, Gary Gensler, has stated that most cryptocurrencies are securities and should fall under the agency’s jurisdiction. However, he considers Bitcoin to be a commodity.
EDX’s launch of a noncustodial exchange is a significant step forward for the industry in terms of addressing security and regulatory compliance concerns. The exchange plans to introduce a clearinghouse later this year to facilitate trade settlement. However, even then, third-party banks and a crypto custodian will be used to hold customer assets.
The recent funding round for EDX, which included Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology, demonstrates the growing interest in the industry from traditional financial institutions. It is clear that Wall Street heavyweights are increasingly recognizing the potential of the cryptocurrency market and want to be part of its growth.
Fidelity Eyes Bitcoin ETF
There are rumors circulating that Fidelity, the third-largest asset manager, is planning a “seismic move” in the market by launching its spot Bitcoin ETF and possibly making a bid for the troubled leading asset manager, Grayscale. These rumors have been amplified by notable crypto influencers.
If these rumors turn out to be true, Fidelity would be following in the footsteps of BlackRock, which recently applied for a Bitcoin spot ETF and generated bullish momentum in the market. Experts believe that BlackRock’s application has a high chance of being approved due to the company’s political connections and success rate with ETF applications.
If Fidelity does launch its own Bitcoin spot ETF and/or make a bid for Grayscale, it could further fuel institutional interest in the cryptocurrency industry. With BlackRock and Fidelity potentially dominating the digital asset space in the US, other traditional financial institutions may follow suit.
However, it is important to note that Fidelity has not confirmed these rumors, and whether the company will indeed make a “seismic move” in the crypto markets remains to be seen. Nevertheless, the rumors have generated excitement among crypto enthusiasts, indicating the growing interest in crypto from traditional financial institutions.
Featured image from Unsplash, chart from TradingView.com
