Wall Street's EDX Exchange: Key Points and How It Differs from Traditional Exchanges

EDX, the crypto asset platform backed by Schwab and Fidelity, has begun supporting trading in Bitcoin, Ether, Litecoin and Bitcoin Cash. What are the key points of the EDX exchange, and how does it differ from traditional exchanges like Binance?

EDX Key Points

• EDX is a crypto asset exchange platform launched as a joint venture by Charles Schwab (SCHW), Fidelity and Ken Griffin's Citadel Securities. It is also known as EDXM.
• EDX is a "non-custodial" exchange that does not hold customers' crypto assets directly and instead uses third-party custodians.
• EDX serves only institutional investors and does not deal with retail investors.
• EDX plans to launch a clearinghouse later this year to help settle customers' trades.
• EDX also announced new investors, including Miami International Holdings, DV Crypto, GTS, GSR Markets LTD and HRT Technologies.

Coins Supported on the EDX Exchange

EDX currently supports trading in Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).

How the EDX Platform Differs from Traditional Exchanges

EDX's platform has not been targeted over "crypto asset securities," the central issue in the lawsuits the U.S. Securities and Exchange Commission (SEC) recently filed against Binance and Coinbase (COIN).

By positioning itself as a non-custodial exchange, EDX aims to meet the needs of major financial institutions that want crypto asset exposure but remain skeptical of centralized crypto asset service providers.

A non-custodial platform does not hold customers' crypto assets directly. Instead, it keeps customer assets with third-party banks acting as custodians, which removes concerns about potential loss of funds.

Traditional exchanges like Binance act as custodians of users' trading assets. Trading crypto assets on a custodial exchange that holds your tokens is convenient, but if the exchange is hacked you could lose your assets, or your returns could shrink because of custody fees.

The EDX exchange operates as a platform that connects a network of firms to execute and settle trades between crypto assets and fiat currency. EDX intends to launch its clearinghouse business later this year to handle settlement.

The exchange launched shortly after BlackRock filed for the first spot Bitcoin exchange-traded fund (ETF) in the U.S., signaling continued institutional interest in crypto assets despite the recent industry downturn and regulatory concerns.

EDX Exchange's Potential and Outlook

EDX also closed its second funding round, bringing in new investors such as Miami International Holdings, proprietary trading firm DV Trading, GTS, GSR, and an affiliate of Hudson River Trading.

Citadel, which leads EDXM, was the most profitable hedge fund last year. Citadel earned huge profits from algorithmic trading such as market making and high-frequency trading, posting net income of $16 billion (about KRW 20.688 trillion) last year alone.

EDX has set a goal of becoming the crypto exchange world's New York Stock Exchange (NYSE) and Chicago Mercantile Exchange (CME). Just as the NYSE is synonymous with the stock market and the CME with derivatives, EDX says it aims to become the leading exchange of the coin market.

CEO Nazarali said, "Although crypto assets are built on blockchain technology, in reality it is difficult to trade without intermediaries," adding, "EDXM can lower trading costs by having brokers collect customer orders and market makers fill those orders through competition."