Top Financial Institutions Collaborate to Launch Crypto Exchange

Today, we delve into EDX Markets, an innovative crypto exchange that has garnered support from major players such as Citadel Securities, Fidelity Investments, and Charles Schwab.

With its trading operations already underway, EDX Markets aims to attract brokers, although potential investors in digital assets remain cautious following recent issues encountered by FTX and Binance.

Key Details to Consider

Distinguishing itself as a “noncustodial” exchange, EDX Markets takes a unique approach by refraining from directly handling its customers’ digital assets. Instead, it operates as a marketplace where firms can agree on prices and execute trades in a peer-to-peer manner.

In its plans, the exchange intends to introduce a clearinghouse to facilitate trading settlements. Nonetheless, it will continue to rely on third-party banks and a crypto custodian to hold customer assets securely.

The exchange does not cater directly to individual investors but anticipates that retail brokerages will direct investors’ orders to its marketplace. This process mirrors the traditional equity markets, where investors submit orders through brokerages like Fidelity and Schwab, rather than accessing the New York Stock Exchange (NYSE) or Nasdaq.

To mitigate regulatory scrutiny from the SEC, EDX Markets will exclusively offer trading services for four cryptocurrencies: Bitcoin, Ether, Litecoin, and Bitcoin Cash. These specific cryptocurrencies have not been classified as securities by the regulatory body.

Conclusion

The growing participation of institutional entities in the crypto markets is expected to contribute to enhanced liquidity and price stability. The non-custodial approach adopted by EDX Markets is viewed as a positive factor, as it instills investor trust and reinforces the security of funds.

Leveraging the extensive experience of Fidelity and Charles Schwab in navigating U.S. securities regulations, this collaborative venture facilitates improved clarity for regulators and fosters collaboration between established traditional financial institutions and the crypto industry.

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