- EDX markets, a recently launched crypto exchange has dropped its plan to use Paxos as a custodian of its digital assets and instead selected Anchorage Digital on a non-custodial arrangement.
- This may be in line with the SEC’s requirement for the separation of businesses in Crypto Platforms, EDX’s new non-custodial approach, and Anchorage Digital’s strong credibility.
- EDX markets seem to be ticking the right boxes as a potential safe and compliant exchange platform with the choice of its new partner who has a bank charter from the Office of the Comptroller.
New York-based cryptocurrency exchange, EDX Markets, has dropped its partnership with Paxos and is currently negotiating with Anchorage Digital for a new collaboration according to Bloomberg.
Launched on the 20th of June, 2023, EDX Markets (EDX) touts itself as the first-of-its-kind digital asset marketplace designed to enable safe and compliant trading of digital assets through trusted intermediaries.
The arrangement with Paxos, a New York-based blockchain company known for issuing a Binance-branded stablecoin, is no longer active. Already the Exchange has listed Anchorage as one of its vendors and partners while Praxos is not on the list.
In the initial agreement announced in October last year, the blockchain company’s customers were to have direct access to the EDX as well as become the custodian of Exchange’s clients’ digital assets.
The new arrangement with Anchorage Digital is non-custodial in nature. In the Non-custodial approach; the exchange does not hold clients’ digital assets during trading, reducing potential conflict of interest and is in line with the vision of the Securities and Exchange Commission (SEC) Chair who wants to see a separation of different parts of the business in crypto platforms such as custody, market-making and trading.
According to Bloomberg, SEC Chair Gary Gensler has criticized existing crypto platforms for failing to separate different parts of their businesses. EDX, seems to be taking that on board with this new approach as well as their vision of becoming a safe and compliant trading place.
Having seen the regulator come hard on Binance and Coinbase, it may seem the new exchange player wants to cut a niche for itself by being on the right side of law and compliance. For example, their new partner, the San Francisco-based Anchorage is a US crypto custodian and holds a bank charter from the Office of the Comptroller making them competent and credible.
Paxo’s Challenges
Paxos was ordered by a New York state regulator to stop issuing Binance-branded stablecoin called BUSD, it also has a potential legal action on its way having received a Wells notice from the SEC in February on issues relating to Paxos’ stablecoin, BUSD, and its alleged classification as a security.
Even though Paxos has expressed disagreement and is prepared to litigate if necessary, the troubles that have befallen other Crypto platforms mean it is only a matter of time before the regulator zeros in on them. In addition, the Crypto platform has not been successful in acquiring a US bank charter.
An attractive Investment Vehicle
Despite the fact that EDX only started operations a week ago, it has gained traction in the market, currently supporting trading in four prominent cryptocurrencies: Bitcon, Ether, Litecoin, and Bitcoin Cash (BCH)
Since EDX’s launch, BCH has experienced a remarkable surge of 70.4% since EDX’s launch and an impressive 101.36% over recent times, this, coupled with its plan on non-custodial offering and alignment with SEC’s requirements, means the New York-based crypto exchange is positioning itself as an attractive and stable investment vehicle for potential investors in the crypto space.
In addition to being powered by notable firms including Citadel Securities, Fidelity Digital Assets, Charles Schwab Corp. EDX has a strong management team, experienced board members and an advisory team from the financial sector.
