Back in September a consortium of some of the largest broker-dealers, global market makers, and venture capital firms came together and announced the launch of a new platform EDX Markets (EDXM). Entities that make up this consortium are some of the largest traditional finance players out there including Charles Schwab, Sequoia Capital, Fidelity Digital Assets, and Citadel Securities among others. This platform/exchange is not one that you would think of with crypto as it does not have any direct customer accounts rather it is 100% for institutional accounts to use. The plan is for these big financial players to put an intermediary in a space that does not need one.
Now I could get into the theatrics about how this defeats the whole purpose of the blockchain and crypto (I mean the idea was to move the middle man after all) but there is a niche market that this could work for. Say MicroStrategy or a super wealthy individual (who does not care about extra exchange fees) wanted to buy more Bitcoin. Well due to the sheer size of these titans backing this platform MicroStrategy/the individual will be able to get the best price with as little slippage as possible. By design, this is not set up to challenge Coinbase or Binance except for the narrow range of clientele I mentioned earlier. Further, it will only deal in a handful of cryptos like Bitcoin to avoid regulatory issues so it's going to be extremely limited in what you could purchase.
I will say it does have a plus with how it will handle the regulatory nature of things for clients. While I have no idea how they will do this they state they will remove "significant conflicts of interest that affect existing cryptocurrency exchanges by separating responsibility for operating the exchange from the entities training on it". My guess is that this is in response to the Coinbase insider trading accusations but at the same time it isn't clear how you could have people reporting to their higher-ups and then those higher-ups not leak information but they want it known it won't happen somehow.
While I looked as much as I could I did not really find an answer to the issues of private keys, storage, and custody of the crypto. They did just recently announce though that they have partnered with Paxos to provide institutional custody of traded assets for EDXM clients and that Paxos customers will get direct access to this state-of-the-art ecosystem. As with most centralized exchanges though it appears it will have significant drawbacks and try to further keep intermediaries important to finance for as long as possible. Given how these financial institutions make money though well their life depends on it.
Please know I am not a financial advisor and make sure you do your own research! If you enjoyed this article and would like to support me further below are a few referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_
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