Schwab and Fidelity-Backed Crypto Exchange EDX Goes Live Adds More Backers - Investopedia

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EDX Markets, a cryptocurrency platform backed by Charles Schwab (SCHW), Fidelity and Ken Griffin's Citadel Securities, launched trading for bitcoin (BTC), ether (ETH), litecoin (LTC), and bitcoin cash (BCH).

Key Takeaways

• Schwab and Fidelity-backed crypto-platform EDX Markets began trading for bitcoin, ether, litecoin, and bitcoin cash.
• EDX is a 'non-custodial' exchange, meaning it does not hold customer crypto and instead uses a third-party custodian.
• EDX plans to launch a clearinghouse later this year to help customers settle trades.
• EDX also announced new investors that include Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology.

How Is The EDX Platform Different?

EDX's platform has avoided the "crypto asset securities" targeted in recent lawsuits by the SEC against Binance and Coinbase (COIN). By positioning itself as a "non-custodial" exchange, EDX aims to cater to the needs of major financial institutions seeking crypto exposure but harboring _reservations about centralized crypto service providers.

A non-custodial platform means it doesn't hold its customers' crypto-tokens and instead, it ensures that customer assets will be held at third-party banks that act as a crypto custodian, removing concerns regarding potential fund misappropriation.

For example, Coinbase acts as a custodian for their customer's crypto, unless they opt for a self-custody Coinbase wallet. While it's simple to start trading crypto with an exchange that holds your tokens, risks include losing your assets in case the exchange is hacked or lower profits due to custodial fees.

The exchange operates as a platform connecting a network of firms for executing and settling trades between crypto assets and fiat currencies. However, it does not help settle those trades just yet. EDX hopes to launch a clearinghouse business later this year, that will enable it to carry out settlements.

The launch of the exchange comes shortly after BlackRock's filing for the first spot bitcoin exchange-traded fund (ETF) in the United States, indicating sustained institutional interest in the long-term crypto market despite recent industry setbacks and regulatory concerns.

EDX has also closed a second funding round, attracting new investors such as Miami International Holdings and affiliates of proprietary trading firms DV Trading, GTS, GSR, and Hudson River Trading.

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