The recent price actions in the crypto markets are said to be due to optimism that was brought by the Bitcoin Spot ETF applications in the US and also of the launching of a new institutional crypto marketplace with a different model (EDX Markets) which is backed by TradFi Wall Street giants and renowned investors. But what exactly is it?
I did a little digging and let me share them on this post.
EDX Markets
The newest institutional digital asset marketplace that begun processing trades on the 20th of June in the US. It is said to be the first-of-its-kind that leverages technology from MEMX to offer a safer, faster and more efficient cryptocurrency trading through trusted intermediaries. The launching was first announced on the 13th of September 2022. (src)
According to EDX website, it is "designed to meet the needs of both crypto native firms and the world’s largest financial institutions. EDX will enable safer, faster and more efficient trading of digital assets, leveraging best practices from traditional financial markets on a purpose-built crypto platform." (Quoted)
EDX Markets has the backing of well-known Wall Street financial firms such as Citadel Securities, Fidelity Digital Assets, Charles Schwab, Paradigm, Sequoia Capital and Virtu Financial. The additional second funding includes investment from Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology. (src) This shows that despite the crypto regulatory noise, these large financial investors still have the appetite to take opportunities presented by emerging markets.
It is non-custodial which means the exchange does not directly touch, handle or store its customers assets which eliminates the risk of funds being misused. Instead, its exchange will serve as a platform connecting a network of firms to execute trades of coins and dollars, using its platform to agree on prices. Then the firms move crypto assets and fiat between each other to settle the trades. In simple terms, it acts as an intermediary to facilitate transactions between parties. (src)
It plans to launch later this year a new clearinghouse (EDX Clearing) to facilitate trades against a central counterparty. It will involve participation of third-party banks and a crypto custodian entrusted to safeguard customers assets.
The exchange does not cater to individual investors. Instead, it serves only the institutional traders or firms to execute and settle trades on its marketplace. This means that retail investors will have to go through financial intermediaries (retail brokerage) to buy and sell crypto assets. It is similar to how trades are executed on the New York Stock Exchange (NYSE) or the Nasdaq (NASDAQ).
For institutions or firms to join and become a member of the EDX Markets, they need to follow some steps, re: apply first and undergo a process before they will be able to trade.
Assets Supported & Market Info
The platform only supports four digital assets to be traded against USD. These include Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). These assets were named as non-securities by SEC.
- Minimum quantity and trade increment: 0.000001
- Minimum price increment: $0.01
- Order Types Supported: Market, Limit, Post-only
- Time-In-Force: Day, FOK, GTT (Good 'til Time)
- Trade Allocation: FIFO
Trading Schedule
Unlike existing crypto exchanges where each have their own UIs, EDX marketplace operates through API-based trading access so it has no traditional frontend or graphical user interface.
And here's how the member's portal look like:
Lastly, here's to quote the statement of its CEO, Jamil Nazarali on the press release, where he highlighted what they can offer, re:
EDX’s ability to attract new investors and partners in the face of sector headwinds demonstrates the strength of our platform and the demand for a safe and compliant cryptocurrency market. We are committed to bringing the best of traditional finance to cryptocurrency markets, with an infrastructure built by market experts to embed key institutional best practices. With the endorsement of our new and growing list of investors and customers, we’re proud to launch trading and look forward to further enhancements to our offering. Looking ahead, EDX Clearing will be a major differentiator for EDX – and resolve an unmet need in the market – by enhancing competition and creating unparalleled operational efficiency through a single settlement process. (via Businesswire)
Conclusion
Being non-custodial and backed by the giants in the traditional investing industry, EDXM seems to be welcomed by institutional investors who are keen on investing on a more structured and less-risky way without subjecting their digital assets to conflict of interest and being misused.
It is noteworthy to know that although EDXM only supports those four assets identified by SEC as non-securities, the marketplace is not registered with the US Securities and Exchange Commission so it may still face some regulatory challenges ahead. It will be interesting to see how this marketplace will impact the crypto market and crypto firms in general.
Disclaimer: For infotainment only.
Lead image created on Canva. EDXM logo extracted from NFTgators. No copyright infringement intended. 26062023/09:20ph