At a time when the two major cryptocurrency exchanges Binance and Coinbase are under heavy pressure from U.S. regulators, the new exchange EDX Markets could reshape the landscape of the digital asset industry.
EDX Markets, backed by Wall Street giants Citadel Securities, Fidelity Digital Assets, and Charles Schwab, has also secured financing from Sequoia Capital, Paradigm, and Virtu Financial. Dedicated to serving institutional investors, the platform will offer trading in four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
What sets EDX Markets apart from existing cryptocurrency exchanges like Binance and Coinbase is its non-custodial model. The exchange does not hold customer's digital assets during trading. According to the CEO of the company, Jamil Nazarali, the exchange plans to partner with third-party custodial services. Moreover, EDX plans to launch EDX Clearing later this year for trade settlement.
As the Business Times reported two weeks ago, shortly after the U.S. Securities and Exchange Commission (SEC) officially sued Binance and Coinbase for securities law violations earlier this month, SEC Chairman Gary Gensler emphasized that cryptocurrency exchanges must comply with securities laws just like traditional assets. He also noted that cryptocurrency exchanges mix various functions, something unheard of in traditional finance, where the New York Stock Exchange doesn't act as a market maker in the way hedge funds do.
As a new generation cryptocurrency exchange, it seems EDX is aimed at solving this problem that regulators have criticized, avoiding the potential conflicts of interest that may arise from combining custody, market making, and trading.
Nazarali pointed out that regulators want cryptocurrency exchanges to avoid the dual functions of broker-dealers, similar to the structure of traditional financial markets. This has created an opportunity for EDX.
Nazarali believes that cryptocurrencies will continue to exist and to develop into an asset class. They need to adopt regulations and investor protection measures from the traditional financial sector, which provides more room for EDX.
The media pointed out that after the cryptocurrency exchange FTX crashed last year, institutional interest in cryptocurrency investments decreased. However, some traditional financial institutions have already laid the groundwork for participating in the cryptocurrency market, such as BlackRock, the world's largest asset management company.
Media reports last week revealed that BlackRock recently submitted an application to the SEC, planning to launch a Bitcoin spot ETF to be traded on Nasdaq. It could become the first publicly traded fund of this type in the U.S.
Last year, BlackRock launched a private Bitcoin spot trust fund. The new Bitcoin ETF will further strengthen BlackRock's position in the cryptocurrency field and bring new vitality to the crypto market. It shows that Wall Street giants still have an interest in Bitcoin.
