[Feature] New Crypto Exchange Debuts with Backing from Wall Street Giants

A new crypto exchange has recently emerged, with the invaluable support and backing from an impressive consortium of financial giants such as Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, Virtu Financial, and Charles Schwab Corp. This momentous stride has the potential to revolutionise the digital-asset landscape, especially considering the current wave of heightened scrutiny from the United States (US) regulatory bodies.

Enter EDX Markets (EDX), an institutional-only exchange that made its grand announcement back in September 2022. This groundbreaking platform is set to revolutionise cryptocurrency trading by offering an enticing selection of four major cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).

What sets EDX apart from established players like Coinbase Global Inc. and Binance Holdings Ltd.? Well, EDX introduces a unique "non-custodial" model, where it refrains from holding clients' digital assets during the trading process. Instead, EDX has partnered with a trusted third-party custodian, as revealed by Chief Executive Officer Jamil Nazarali. EDX operates as a dynamic marketplace, where participating firms engage in the execution of coin and dollar trades. Leveraging its robust platform, EDX facilitates the establishment of mutually agreed-upon prices. Subsequently, the firms independently conduct the movement of digital assets and cash to settle the trades amongst themselves.

This striking departure from the norm challenges the traditional exchange model, which typically requires customers to entrust their digital coins to wallets managed by the exchange itself. By removing the inherent risk of fund loss or misuse, EDX provides a secure and transparent trading environment. This groundbreaking noncustodial approach arrives on the scene in the wake of recent legal actions by the US Securities and Exchange Commission (SEC) against major crypto exchanges like Binance and Coinbase.

With regulatory authorities increasingly advocating for the separation of crypto exchanges from broker-dealer functions, mirroring the structure of traditional financial markets, EDX stands poised to seize new opportunities, according to Nazarali.

SEC Chairman Gary Gensler's firm belief is that the majority of cryptocurrencies should be categorised as securities, thus placing them firmly within the jurisdiction of the agency he oversees. However, intriguingly, there is one notable exception to this classification: BTC. Gensler, displaying a distinct comfort level, confidently designates Bitcoin as a commodity.

Nazarali expressed in an interview, “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…The message we’ve got from our investors is that this creates an even bigger space for us.”

In the near future, EDX plans to introduce a cutting-edge clearinghouse, revolutionising trade settlement. Even then, it remains dedicated to upholding the highest standards by collaborating with trusted third-party banks and a reputable crypto custodian to safeguard customer assets.

The recent funding round for EDX paints a vivid picture of the industry's growing allure from traditional financial institutions. As Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology join the fray, it becomes abundantly clear that the industry's potential has captivated the attention of Wall Street heavyweights. With their unwavering belief in its growth trajectory, these industry titans are eager to contribute to its evolution.

Nazarali also pointed out, “EDX’s ability to attract new investors and partners in the face of sector headwinds demonstrates the strength of our platform and the demand for a safe and compliant cryptocurrency market…We are committed to bringing the best of traditional finance to cryptocurrency markets, with an infrastructure built by market experts to embed key institutional best practices. With the endorsement of our new and growing list of investors and customers, we’re proud to launch trading and look forward to further enhancements to our offering. Looking ahead, EDX Clearing will be a major differentiator for EDX -- and resolve an unmet need in the market – by enhancing competition and creating unparalleled operational efficiency through a single settlement process.”

This significant development begs the question: could this be the transformative catalyst that reshapes the digital-asset landscape? As the US intensifies its scrutiny of the crypto sector, the timing of this launch holds profound implications for the future of the industry.