A consortium of leading Wall Street broker-dealers, global market makers, and venture capital firms have announced the launch of a first-of-its-kind crypto exchange called EDX Markets (EDXM) that will be operated like a traditional stock exchange.
In a press statement, the backers of the exchange were revealed to currently include Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, and Virtu Financial. More partners are expected to back the exchange over time.
EDXM’s leadership includes CEO Jamil Nazarali, formerly Global Head of Business Development at Citadel Securities, CTO Tony Acuña-Rohter, formerly Chief Technology Officer at ErisX, and General Counsel David Forman, formerly Chief Legal Officer at Fidelity Brokerage Services and General Counsel for Fidelity Digital Assets.
The crypto exchange will operate as an independent entity by allowing investors to trade cryptocurrencies that have been confirmed to not be securities through their existing brokers. EDXM says it will leverage technology provided by MEMX, an innovative consumer-centric market operator founded in 2019, to enable a highly liquid crypto ecosystem that aggregates liquidity from multiple market makers to reduce the spread and improve transparency.
This technique is also expected to result in better prices for both retail and institutional investors than those offered by existing crypto exchanges fee-wise. Meanwhile, EDXM intends to secure investors’ crypto assets and eliminate expensive bilateral settlements by leveraging a network of select digital custodians and netting and settling trades on the blockchain.
“Crypto is a $1 trillion global asset class with over 300 million participants and pent-up demand from millions more. Unlocking this demand requires a platform that can meet the needs of both retail traders and institutional investors with high compliance and security standards,” the EDXM board said in a statement.
Is this the future of crypto?
The platform is currently open to selected users in a trial period that is expected to last till early 2023. However, the promises made by the exchange have already been called into question by observers.
According to 24/7 Wall Street, crypto market participants should be wary of the low fees promise being made as brokers have been known to have hidden charges while touting their offer as having ‘low fees.’
Regardless, the move still demonstrates mainstream adoption of crypto globally despite the prevailing crypto winter. Before now, the indicator of this has been the interest from financial institutions to offer crypto trading services to their clients.
Black Rock, one such firm, last month announced plans to offer institutional investors Bitcoin trading services in partnership with Coinbase. Outside the U.S., Deal Street Asia reported that the government of Indonesia also has plans to launch a regulated crypto exchange by the end of 2022.