As Binance and Coinbase, two major cryptocurrency exchanges, are being hit hard by US regulators, the launch of new exchange EDX Markets may reshape the digital asset industry.
Backed by Wall Street giants Citadel Securities, Fidelity Digital Assets, and Charles Schwab, EDX Markets has also received financing from Sequoia Capital, Paradigm, and Virtu Financial. It is designed to serve institutional investors and will offer trading in four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Unlike existing cryptocurrency exchanges such as Binance and Coinbase, EDX Markets uses a non-custodial model and does not hold customers' digital assets during trading. Its CEO, Jamil Nazarali, said it will work with third-party custodians. It also plans to launch clearinghouse EDX Clearing later this year for trade settlement.
Two weeks ago, Wall Street News reported that shortly after the US Securities and Exchange Commission (SEC) formally charged Binance and Coinbase with violating securities regulations earlier this month, SEC Chairman Gary Gensler said that cryptocurrency exchanges, like traditional assets, must comply with securities laws. He also pointed out that cryptocurrency exchanges mix multiple functions and that in the traditional financial sector, the New York Stock Exchange would not act as a market maker like a hedge fund.
As a new generation of cryptocurrency exchanges, EDX seems to be addressing this regulatory issue and avoiding conflicts of interest that may arise from combining custody, market making, and trading.
Nazarali pointed out that regulators expect cryptocurrency exchanges not to have both broker-dealer and trader functions, just like the traditional financial market structure, which creates an opportunity for EDX.
Nazarali believes that cryptocurrencies will continue to exist, and to develop them into an asset class, traditional financial regulations and investor protection measures need to be adopted, which provides EDX with greater space.
The media pointed out that after the collapse of the cryptocurrency exchange FTX last year, institutional interest in cryptocurrencies decreased. But some traditional financial institutions have already laid the foundation for participating in the cryptocurrency market, such as the world's largest asset management company, BlackRock.
Last week, the media reported that BlackRock recently submitted an application to the SEC to launch a spot Bitcoin ETF, which is expected to become the first publicly traded fund of its kind in the United States, trading on Nasdaq.
The article at the time mentioned that last year, BlackRock launched a private Bitcoin spot trust fund, and the new Bitcoin ETF will further strengthen BlackRock's position in the cryptocurrency field and bring new vitality to the cryptocurrency market.
It indicates that Wall Street giants still have an interest in Bitcoin.

SCHW

EDX Markets is backed by Citadel, Fidelity, and Charles Schwab, and specializes in serving institutional clients. It operates in a non-custodial model and collaborates with third-party custodians, avoiding the criticism faced by existing cryptocurrency exchanges such as Binance, which combine custody and trading.

New cryptocurrency exchange EDX goes live, backed by a group of heavyweights, with the potential to reshape the entire industry.