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EDX Takes Crypto to Wall St, But Fears of a 'Land Grab' are Premature

Institutional crypto exchange EDX Markets adds Anchorage Digital as its clearinghouse custody provider, but fears of Wall Street swallowing crypto whole are premature.

Institutional crypto exchange EDX Markets has chosen Anchorage Digital to serve as the custody provider for its clearinghouse arm, the imaginatively named EDX Clearing, due to launch later this year, according to a press release this week.

Anchorage is the only federally chartered and regulated crypto bank in the U.S. and its custody services will further EDX’s stated aim of bringing market structure standards from traditional finance to the digital asset ecosystem, as Anchorage Co-Founder and President Diogo Mónica explained:

“Drawing from the blueprint of traditional finance will be critical to unlocking the next phase of institutional crypto. Anchorage Digital has proven that separating custody and exchange functions for institutions isn’t just possible, it’s essential.”

Unlike regular crypto exchanges, EDX Markets doesn’t hold customers’ assets, meaning users must go through intermediaries to buy and sell on the platform. EDX Clearing will be used to settle trades matched on EDX, providing a single settlement process and increasing the efficiency of the exchange.

EDX Markets is a recent addition to the cryptocurrency exchange scene, as we Observed after its launch in June. It is backed by several massive Wall Street names, including Charles Schwab, Citadel Securities and Fidelity Digital Assets.

It has since seen a steady flow of updates, such as the integration of the Talos Order and Execution Management System (OEMS) in July. Talos is an institutional-grade trading technology for digital assets, and gives EDX users access to a wider range of over 40 liquidity options.

More recently, it integrated Solidus Labs’ HALO platform to monitor transactions, manage and assess risk, and remain ahead of the constantly evolving regulatory regime, earlier this month.

With its big-name backers and TradFi market structures, it could be seen as heading a current ‘land grab’ of the crypto space by institutional players. Indeed, a Washington Post headline from last month smugly announced that “Crypto pledged to dethrone Wall Street. It's getting swallowed instead.”

So is this the end for the crypto trading scene as we know and love it?

Well of course not. EDX currently offers a very limited and sanitized take on the crypto exchange, which the vast majority of traders would not use even if they were invited to. It caters to a very specific group of institutional traders, who are so desperate for any exposure to crypto within the bounds of their comfort zones that they will happily accept whatever is on offer.

While EDX plans to add more tokens to its current selection of four (bitcoin, ethereum, litecoin and  bitcoin cash) when the regulatory regime is clarified, it will never compete with the range of tokens on offer at a less anodyne exchange. It was never designed to.

While we should applaud EDX’s efforts to make crypto accessible to more institutional investors, and additional capital in the market is always welcome, it has quite some way to go before degenerate meme-traders need to worry about Wall Street swallowing their risky trades.

Of course, we will be here to Observe it if it ever does.