EDX Markets, a new cryptocurrency exchange backed by Citadel Securities, Fidelity Investments and Charles Schwab, has quietly entered the market, aiming to attract brokers and investors interested in digital assets.
The exchange, which has yet to announce its official launch, operates in a noncustodial capacity, meaning it does not handle customers‘ digital assets directly. Instead, it serves as a marketplace where firms can execute trades. This eliminates the risk of bank-run style failings that the industry witnessed in 2022 with FTX, Celsius and others.
The development comes just as American exchange Coinbase and worldwide exchange Binance face lawsuits from the U.S. Securities and Exchange Commission. While the crackdown indicated increasing scrutiny from regulators, it seems that larger institutions are viewing this as an opportunity to swoop in for market share. These firms often have close ties to regulators and are much more effective at complying with regulations as a result of their scale, and as such, the current environment is seemingly ripe for disruption.
Indeed, a recent filing by BlackRock, the world’s largest asset management firm with more than $8 trillion under management, for a spot Bitcoin ETF is another sign that these institutions see the current environment as an opportunity for expansion into the sector.
SEC Chairman Gary Gensler has repeatedly claimed that bitcoin is not a security, but a commodity, effectively keeping it out of the realm of SEC regulation. As a result, institutions like BlackRock may perceive bitcoin to be the safest cryptocurrency to offer products for, although this newly announced EDX exchange will feature other cryptocurrencies as well.
Overall, the development indicates that BlackRock is not the sole major traditional finance institution paying attention to bitcoin — everyone wants their slice of the pie, and regulators have served up that pie fresh out of the oven.