Crypto exchange EDX Markets went live on June 19 without much media hype. However, crypto investors are expecting a lot from the new trading place for Bitcoin, Ether and Co., because a new approach should attract more institutional investors to the crypto sector.
• Institutional investors in the crypto market
•”Non-Custodial” model as an innovation
• Bitcoin cash profits
After the collapse of the crypto exchange FTX and the allegations of billions of dollars in fraud against Sam Bankman-Fried and his employees, institutional investors’ confidence in the crypto sector has decreased noticeably. And in the midst of investigations by the US Securities and Exchange Commission (SEC) against major players in the crypto universe, a crypto exchange with a new, innovative model is now starting operations. “EDX’s ability to attract new investors and partners despite industry headwinds demonstrates the strength of our platform and the demand for a safe and compliant cryptocurrency market,” EDX Markets CEO Jamil Nazarali is quoted as saying in the press release.
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EDX Markets: Point of contact for institutional investors in the crypto sector
In contrast to crypto exchanges like Binance or Coinbase, EDX Markets wants to prioritize security and transparency. EDX is a joint venture between well-known players in the traditional financial sector – Charles Schwab, Fidelity Investments and Citadel Securities. According to CNBC, Miami International Holdings, DV Trading, GSR, GTS, Hudson River Trading and other large investors also participated in a financing round.
The platform offers itself as an alternative to large crypto exchanges and above all wants to win the trust of institutional investors from the traditional financial sector. When the new crypto exchange format was announced in September last year, the former head of business development at Citadel, Jamil Nazarali, emphasized in an interview that he wanted to deliberately limit trading on the new platform to a few cyber currencies in order to avoid official supervision protected by the SEC. That’s why EDX Markets is limited to Bitcoin, Ethereum, Litecoin
and bitcoin cash.
Non-Custodial Model: EDX Markets is an OTC trading platform
EDX Markets is a non-listed trading platform (OTC). Rather, the companies involved in a transaction coordinate on the pricing and execution of the trade. If there is an agreement on the price of the negotiated transaction, the funds are transferred among themselves. In contrast to the large crypto exchanges, within the so-called “non-custodial” model chosen by EDX Markets, the coins of the customers are not kept by the exchange operator during trading. A third party should take over this task. CNBC reports that the company plans to work with third-party banks and a crypto custodian later this year and set up a clearing house to enable transparency and increased security for customer funds. “We believe cryptocurrencies are here to stay, but for them to continue to evolve as an asset class, they need to adopt the rules and investor protections that exist in traditional finance,” Jamil Nazarali told Bloomberg in an interview. “The message we got from our investors is that this creates an even bigger space for us,” said the EDX Markets CEO.
Rosy future? Traditional financial institutions and crypto market
If the EDF Markets model prevails on the crypto market, this could be a bridge to the crypto sector for institutional investors. A collaboration between traditional financial institutions and crypto companies could bring a huge inflow of capital to the crypto market.
Other traditional financial institutions are also making their way into the crypto universe. Among others, the world’s largest asset manager BlackRock, in cooperation with Coinbase, applied to the SEC to launch a Bitcoin spot ETF at the beginning of June.
The price of Bitcoin Cash in particular was apparently able to benefit from the news of the launch of the OTC trading platform EDX Markets. The Bitcoin Fork from 2017, which according to Bitcoin Kurier was long considered a failed project in the shadow of Bitcoin, received a powerful boost: Bitcoin Cash more than doubled within a day on June 21 and even conquered the US 300 at times -dollar mark (as much as 312.94 US dollars on June 30). The coin is now ranked 14th among the largest cryptocurrencies at $283.32 (as of July 6, 2023).
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