Finance giants are expanding their horizons in the cryptocurrency space with the recent launch of EDX Markets, a crypto exchange aimed at institutional investors. The exchange, which was first announced back in September 2022, had attracted a litany of major backers including Citadel Securities, Fidelity Digital Assets, Virtu Financial, Charles Schwab, Sequoia, and Paradigm.
EDX Markets’ close collaboration with US securities regulators marks a significant departure from other exchanges like Binance and Coinbase, which had to face legal action from the Securities and Exchange Commission (SEC) in early June. By heeding regulatory demands and positioning itself as a cautious player in the cryptocurrency market, EDX Markets has managed to avoid any regulatory hurdles thus far.
At its launch, EDX Markets offered only four cryptocurrencies for trading: Bitcoin, Ether, Litecoin, and Bitcoin Cash. Crucially, none of these tokens have been deemed securities by the SEC, a point of contention that has led to lawsuits against other platforms. EDX’s approach appears to be one of caution and foresight, as recent regulatory actions have seen exchanges delist a number of tokens considered securities.
Furthermore, EDX Markets takes after traditional stock market models that operate under clearer regulatory guidelines. While direct access to the New York Stock Exchange is denied to investors, EDX funnels trades through retail brokerages. This key distinction sets EDX apart from platforms like Binance and Coinbase, where investors are free to directly trade tokens.
The non-custodial nature of EDX Markets is another factor setting it apart from other exchanges. While the platform plans to launch a clearinghouse to settle trades, it will continue using third-party banks and a crypto custodian.
However, this regulated approach may call into question the scope for innovation in the world of cryptocurrencies. Many established investors may be enticed by the platform’s compliance and cautious approach, but newer investors may be left wondering if EDX’s focus on regulation will stifle the potential for future developments in the space.
In conclusion, the launch of EDX Markets sheds light on two opposing perspectives: one that embraces compliance with traditional market regulations and another that seeks to explore the boundless possibilities outside of the conventional regulatory sphere. The challenge remains whether these two camps can coexist or if a different approach entirely must be considered. Time will tell how EDX Markets navigates this delicate balance, with many eyes watching its progression in the months and years to come.
Source: Blockworks
