Crypto Exchange With Wall Street Backing: Citadel Securities, Fidelity, Schwab Enter The Fray

EDX Markets, a new crypto exchange backed by several Wall Street tycoons, including Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, and Virtu Financial, has started operations. 

The exchange, launched in September, currently allows trading of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.

Crypto Exchange Launches With A Bang

What sets EDX apart from other exchanges is that it is a “noncustodial” exchange, meaning it does not directly handle its customers’ digital assets. Instead, EDX runs a marketplace where firms agree to execute trades of coins and dollars, using its platform to agree on prices. Then the firms move digital assets and cash between each other to settle the trades.

This is in contrast to other exchanges, which typically require their customers to park their digital coins in wallets run by the exchange, creating the risk that the exchange could lose the funds or be tempted to misuse them.

The move to create a noncustodial exchange comes after the Securities and Exchange Commission (SEC) recently sued both Binance and Coinbase, two of the largest crypto exchanges in the world.

SEC Chairman Gary Gensler has repeatedly said that most cryptocurrencies are securities and should fall into the agency’s jurisdiction. At the same time, Bitcoin is the only crypto he is comfortable labeling as a commodity.

EDX’s decision to launch a noncustodial exchange is a significant step forward for the industry, as it seeks to address concerns around security and regulatory compliance. The exchange plans to launch a clearinghouse to facilitate settling trades later this year, but even then, it plans to use third-party banks and a crypto custodian to hold customer assets.

The recent funding round for EDX, which included Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology, is a testament to the growing interest in the industry from traditional financial institutions. It is clear that Wall Street heavyweights are increasingly recognizing the potential and are keen to be a part of its growth.

As reported by Bitcoinist, rumors are circulating that Fidelity, the third-largest asset manager, is planning a “seismic move” in the market by launching its spot Bitcoin ETF and potentially making a bid for the troubled leading asset manager, Grayscale. 

The rumors were sparked by a tweet from Andrew Parish, co-founder of Arch Public, and have been amplified by notable crypto influencers.

Suppose the rumors turn out to be true. In that case, Fidelity could be following in the footsteps of BlackRock, which recently applied for a Bitcoin spot ETF that has generated bullish momentum in the market.

Experts believe that BlackRock’s application has a strong chance of being approved, given the company’s strong political connections and high success rate with ETF applications.

If Fidelity does launch its own Bitcoin spot ETF and/or make a bid for Grayscale, it could further fuel the growing institutional interest in the nascent industry. With BlackRock and Fidelity potentially owning the digital asset space in the US, it could pave the way for other traditional financial institutions to follow suit.

However, it is important to note that Fidelity has not confirmed these rumors, and whether the company will indeed make a “seismic move” in the crypto markets remains to be seen. Nevertheless, the rumors have generated excitement among crypto enthusiasts, further indicating the growing interest in crypto from traditional financial institutions.

Featured image from Unsplash, chart from TradingView.com 

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