In a recent development, prominent institutional crypto exchange firm, EDX Markets, announced its forthcoming collaboration with Anchorage Digital, a regulated crypto platform highly acclaimed for its comprehensive financial services and infrastructure solutions. This partnership aims to bridge gaps between traditional finance and the digital asset landscape, with the launch of EDX Clearinghouse this year. This venture will not only address the needs of its institutional client base but also elevate the standard for security, governance, risk, and compliance solutions in the crypto domain.
A clearinghouse serves as a central intermediary ensuring the efficiency and integrity of trade settlements. By embracing this model, EDX Markets envisages creating a secure environment that minimizes counterparty risk and optimizes transaction processes. As regulatory pressures mount on crypto industry, the separation of roles between exchange and custody, a business model typical for traditional finance, may indeed play into the hand of EDX. It places them in a position where they could conceivably enhance their reputation as crypto industry leader and capture an increased market share.
EDX seems poised to gain from this shift, especially with institutional involvement intensifying in the crypto market. One could argue that it’s an obvious move to increase market share at the expense of major competitors like Coinbase, which provides digital asset exchange, custody, and settlement all under one umbrella. After the demise of FTX last year, the centralized business model has been viewed as unsustainable, a pitfall EDX hopes to avoid.
The model of EDX Clearing is designed to improve transaction processes for EDX. This new platform separates itself from other crypto exchanges by performing more like a traditional financial marketplace, which has members as participants rather than users. It aims to establish a secure trading environment, safeguarded by Anchorage Digital Bank.
Anchorage Digital has the unique distinction of being the first federally chartered crypto bank and currently, it’s the only regulated chartered crypto bank in the US. It’s recognized for its pre-launch support, post-mainnet scaling, and access to institutions. Its reputation for security and efficiency makes it a fitting ally for EDX’s clearinghouse enterprise, and it will leverage its comprehensive custody infrastructure to deliver on these promises.
Many see this synergy between EDX and Anchorage Digital as a first step towards fusing the strengths of traditional financial markets with the crypto world. Unquestionably, a promising development but will this enough to shift the balance in an ever-evolving crypto market remains to be seen.