Crypto Exchange with Wall Street backing: Citadel Securities, Fidelity and Schwab enter the fray

EDX Markets, a new crypto exchange backed by several Wall Street moguls 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 “non-custodial” exchange, which means that it does not directly manage its clients’ digital assets. Instead, EDX runs a marketplace where companies agree to execute trades in coins and dollars, using its platform to agree on prices. Then the companies transfer digital assets and money between them to settle the transactions.

This contrasts with other exchanges, which generally require their clients to place their digital coins in wallets managed by the exchange, which creates the risk that the exchange may 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 Binance and Coinbase, two of the world’s largest crypto exchanges.

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

EDX’s decision to launch a non-custodial 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 help settle trades later this year, but even then it plans to use third-party banks and a crypto custodian to hold client assets.

EDX’s recent funding round, which included Miami International Holdings, DV Crypto, GTS, GSR Markets LTD and HRT Technology, is a testament to the growing interest of traditional financial institutions in the sector. It is clear that the heavyweights of Wall Street increasingly recognize the potential and want to participate in its growth.

Fidelity Eyes Bitcoin ETF

As reported by bitcoinistRumors are swirling that Fidelity, the third-largest asset manager, is planning a “seismic shift” in the market by launching its spot Bitcoin ETF and potentially making a bid for top struggling asset manager Grayscale.

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

Let’s assume the rumors turn out to be true. In this case, Fidelity could follow in the footsteps of BlackRock, which recently applied for a Bitcoin spot ETF that generated bullish momentum in the market.

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

If Fidelity launches its own spot Bitcoin ETF and/or makes an offer on Grayscale, it could further fuel growing institutional interest in the fledgling industry. With BlackRock and Fidelity potentially owning the digital asset space in the US, this 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 it remains to be seen if the company will indeed make a “seismic move” in the crypto markets. Nonetheless, the rumors have sparked excitement among crypto enthusiasts, further indicating the growing interest in crypto from traditional financial institutions.

Crypto
Bullish trend of Bitcoin on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com

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