Benzinga - EDX Markets, a crypto exchange exclusively for institutional investors, has launched with the backing of big financial players like Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp (NYSE: SCHW).
This development has the potential to transform the cryptocurrency sector, particularly at a time when U.S. regulatory authorities are intensifying their scrutiny of the industry.
EDX Markets, which made its debut announcement in September 2022, has initiated trading in Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), Litecoin (CRYPTO: LTC), and Bitcoin Cash (CRYPTO: BCH).
What sets EDX Markets apart from established crypto platforms like Coinbase Global Inc. (NASDAQ: COIN) and Binance Holdings Ltd. (CRYPTO: BNB) is its "non-custodial" model.
Jamil Nazarali, EDX Markets' CEO, explained that the exchange doesn’t store clients' cryptocurrencies during the trading process.
Instead, EDX has teamed up with an independent custodian for this purpose.
Nazarali highlighted that regulatory authorities are keen on having crypto exchanges dissociated from broker-dealer activities, mirroring the traditional financial market structure.
This change is seen as an opportunity by EDX.
“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,” he said and added, “The message we’ve got from our investors is that this creates an even bigger space for us.”
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EDX Markets has garnered support from prominent firms like Paradigm, Sequoia Capital, and Virtu Financial Inc. Furthermore, the exchange has managed to raise additional funds from investors such as Miami International Holdings, GTS, GSR Markets, and HRT Technology.
EDX Markets has ambitions to inaugurate EDX Clearing later this year for trade settlements.
The United States Securities and Exchange Commission (SEC) has recently expanded its clampdown on the cryptocurrency sector, filing lawsuits against industry giants Binance and Coinbase.
The SEC accuses these firms of functioning as unregistered securities exchanges, broker-dealers, and clearinghouses. Both Binance and Coinbase have rebuffed these allegations.
While institutional enthusiasm for cryptocurrency investment has dwindled after market setbacks and the collapse of significant companies like FTX (CRYPTO: FTT) last year, conventional financial institutions haven't been entirely dormant.
For instance, BlackRock Inc. (NYSE: BLK), the world's foremost asset manager, recently submitted filings to launch a spot Bitcoin exchange-traded fund.
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