- Wall Street-backed EDX Markets aims to reshape crypto trading.
- The EDX’s non-custodial business model likely appeases regulators.
- The launch of EDX could signal a bullish future for the crypto market.
EDX, a crypto exchange backed by Wall Street financial giants, officially launched, promising to impact the crypto market significantly.
This article delves into everything you need to know about EDX, from its unique features to its potential influence on the crypto landscape.
What is EDX and Who Is Behind It?
EDX is a crypto exchange exclusively for institutional investors. Officially launched on Tuesday, June 20, it is backed by financial heavyweights such as Citadel Securities, Fidelity Digital Assets, and Charles Schwab.
Sponsored
EDX aims to reshape the crypto asset trading landscape by offering a unique, non-custodial model that differentiates it from other crypto exchanges.
What Cryptocurrencies Does EXD Offer?
EDX aims to offer sufficiently decentralized crypto assets with the least chance of getting in trouble with the SEC.
At launch, the exchange offers just four crypto assets. These are the two largest crypto assets, Bitcoin (BTC) and Ether (ETH). Moreover, EDX offers some of the largest Proof-of-Work crypto: Litecoin (LTC) and Bitcoin Cash (BCH).
Sponsored
As EDX evolves, it may add more cryptos to its offering. This will also depend on the changing regulatory landscape in the United States.
Can I Trade Crypto with EDX?
EDX is designed exclusively for institutional investors. This means that individual retail investors cannot trade with EDX.
There are several reasons for this, including EDX’s business strategy and potential regulatory risks. Currently, it is unclear whether EDX has any plans to offer services to retail investors eventually.
How is EDX Different from Other Crypto Exchanges?
Other than its exclusive focus on institutional investors, what sets EDX apart from other crypto exchanges is its ‘non-custodial’ model. This means that the exchange does not hold customer crypto. Instead, EDX relies on banks to offer custodial services.
This business model, coupled with its exclusive focus on institutional investors, makes EDX potentially more in line with SEC’s regulation.
How Does The EDX’s Non-Custodial Model Work?
EDX operates on a ‘non-custodial’ model, differentiating it from many conventional cryptocurrency exchanges. In a non-custodial model, the exchange does not hold customer cryptocurrencies.
Instead, a third-party custodian, typically a bank, holds these assets. For instance, banks like Deutsche Bank recently filed for a crypto custodian license in Germany.
This approach offers several benefits. Firstly, it reduces the risk of loss due to hacking or other security breaches at the exchange. Secondly, it eliminates the risk of the exchange comingling customer assets, like in the case of FTX.
How Does EDX Ensure Security of User Funds?
While the exact security measures for EDX are unclear, its non-custodial model plays a significant role in security.
EDX does not hold customer cryptocurrencies. Instead, these assets are held by a third-party custodian. This approach reduces the risk of loss due to hacking, as customer assets are not stored on the exchange itself.
What Are The Trading Fees on EDX Markets?
EDX is currently on a fee holiday, likely to onboard new users. It is not clear what the fee structure will be in the future.
DailyCoin reached out to EDX Markets to ask about the prospective fees. This section will be updated if EDX Markets responds.
Will EDX Compete With Binance, Coinbase?
While retail investors remain the largest market for most crypto exchanges, institutional investors are also an important market segment. For that reason, EDX will likely compete with traditional crypto exchanges for institutional investors.
Interestingly, Binance has considered launching its own non-custodial service for institutions in May 2023. This potentially signaled recognition of EDX as a potential competitor for big clients.
Does the SEC Approve EDX?
The US Securities and Exchange Commission (SEC) recently intensified its crypto exchange crackdown. While the agency has not addressed the EDX launch so far, there are reasons to think EDX won’t receive the same harsh treatment.
For one, EDX’s non-custodial model will likely make it less of a target for regulatory bodies like the SEC. Moreover, its focus on institutional clients will likely make it more compliant. This is because the SEC’s primary directive is to protect retail investors.
Given EDX’s non-custodial model and its focus on institutional investors, it is less likely to be a SEC target than crypto-native exchanges.
What Impact Will EDX Markets Have On Crypto?
The launch of EDX could signal a significant shift in the crypto landscape. By offering a secure and reliable platform for institutional investors, EDX could potentially attract more institutional investment in crypto.
The most impactful tokens will likely be the decentralized tokens that trade on EDX. These are, so far, Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). Their listing will likely increase their liquidity and trading volume, potentially leading to higher prices and dominance.
Is EDX’s Launch Bullish For Crypto?
The launch of EDX is seen by many as a bullish signal for the crypto market. With the backing of major financial institutions, EDX’s entry into the market could attract more institutional investment into crypto.
Furthermore, launching a crypto exchange that is less likely to be a target for regulatory bodies like the SEC could also boost confidence in the crypto market.
Still, it is unclear how the EDX launch will affect altcoins that meet the SEC’s definition of securities. Specifically, the EDX will not list these tokens. For that reason, the move may prompt projects to start favoring more decentralized models.
On the Flipside
- EDX’s launch signals a growing acceptance of crypto among institutional investors.
- As EDX is designed exclusively for institutional investors, its impact on retail investors may be limited.
Why This Matters
With major financial institutions backing a crypto exchange, the exchange can potentially attract institutional investors to crypto.
Read more about Bitcoin’s rising dominance after the SEC’s crackdown on altcoins:
Does Bitcoin Reclaiming 50% Dominance Spell Danger for Altcoins?
Read more about EDX’s launch as major institutions jump in crypto:
Citadel, Fidelity’s Exchange EDX Joins Deutsche Bank in Crypto Push
