Wall Street backs new low-fee crypto exchange
A consortium of leading Wall Street brokers, global market makers and venture capital firms has announced the launch of a first-of-its-kind crypto exchange called EDX Markets (EDXM) that will be operated like a traditional exchange.
In a press release, the backers of the exchange were revealed to include Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital and Virtu Financial. More partners are expected to support the exchange over time.
EDXM’s leadership includes CEO Jamil Nazarali, former Global Head of Business Development at Citadel Securities, CTO Tony Acuña-Rohter, former Chief Technology Officer at ErisX, and General Counsel David Forman, former Chief Legal Officer at Fidelity Brokerage Services and General Counsel for Fidelity Digital Assets.
The crypto exchange will operate as an independent entity by allowing investors to trade cryptocurrencies that have been verified not to be securities through their existing brokers. EDXM says it will leverage technology provided by MEMX, an innovative consumer-centric market operator founded in 2019, to enable a highly liquid crypto ecosystem that aggregates liquidity from multiple market participants to reduce spread and improve transparency.
This technique is also expected to result in better prices for both private and institutional investors than those offered by existing crypto exchanges in terms of fees. Meanwhile, EDXM intends to secure investors’ crypto assets and eliminate expensive bilateral settlements by leveraging a network of select digital custodians and netting and settling trades on the blockchain.
“Crypto is a $1 trillion global asset class with over 300 million participants and pent-up demand from millions more. Unlocking this demand requires a platform that can meet the needs of both retail traders and institutional investors with high compliance and security standards,” EDXM said – the board in a statement.
Is this the future of crypto?
The platform is currently open to select users in a trial period expected to last until early 2023. But the promises made by the exchange have already been called into question by observers.
According to 24/7 Wall Street, crypto market participants should be wary of promises of low fees, as brokers have been known to have hidden costs while touting their offering as “low fees.”
Regardless, the move demonstrates the continued mainstream adoption of crypto globally despite the prevailing crypto winter. Until now, the indicator of this has been the interest of financial institutions in offering crypto trading services to their clients.
Black Rock, one such firm, announced plans last month to offer institutional investors Bitcoin trading services in partnership with Coinbase. Outside of the US, Deal Street Asia reported that the government of Indonesia also has plans to launch a regulated crypto exchange by the end of 2022.
