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Leading financial institutions back the launch of a new digital asset exchange

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(Kitco News) - A consortium of financial institutions, including Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital and Virtu Financial, have announced the launch of EDX Markets (EDXM), “a first-of-its-kind exchange that will address latent demand for digital asset trading by enabling safe and compliant trading of digital assets through trusted intermediaries.” 

This move by the consortium comes as traditional financial institutions are making a concerted push into the realm of digital assets despite the nearly year-long slump in the wider crypto market. 

The new EDXM exchange is designed to “enable a highly liquid cryptocurrency ecosystem that aggregates liquidity from multiple market makers to reduce spreads and improve transparency,” the announcement said. “This commitment to price discovery and efficiency is expected to result in better prices for investors than those offered by existing cryptocurrency exchanges.”

The technology infrastructure for EDXM will be provided by MEMX, a market operator founded in 2019 by Bank of America Merrill Lynch, Charles Schwab and Citadel Securities, among others.

According to the announcement, EDXM will leverage “a network of select digital custodians to safeguard assets,” which will enable trades to be “netted and settled on the blockchain for greater speed and efficiency at lower cost, eliminating the need for expensive bilateral settlement.”

As for the reason behind the creation of the new exchange, its board of directors stated that “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.”

Abra to launch Abra Bank – the first fully regulated U.S. bank for cryptocurrencies

Fidelity mulls offering Bitcoin access to retail traders

In other news from the world of cryptocurrencies and financial institutions, the Wall Street Journal is reporting that Fidelity Investments is mulling over the idea of letting all of its retail customers have access to trading Bitcoin (BTC) directly through the brokerage platform. 

With a current roster of more than 34.4 million brokerage accounts, this would market one of the largest crypto integrations by a major traditional financial institution to date. 

Fidelity has offered crypto trading to its institutional clients since 2018, and in 2020, the firm launched its Wise Origin Bitcoin Index crypto fund for wealthy clients. 

The company has yet to officially confirm this development, but that hasn’t stopped the rumor mill from spinning. 

At the SALT Conference in New York on Monday, Galaxy Digital CEO Mike Novogratz said, “A bird told me Fidelity is going to shift their retail customers into crypto soon enough. I hope that bird is right. So we are still [in] this institutional march and that gives crypto its floor.”

A Tuesday statement from Fidelity addressing the rumors stated, “While we have nothing new to announce, expanding our offerings to enable broader access to digital assets remains an area of focus.”

Back in April of this year, Fidelity made waves in the financial world after it gave 401(k) retirement account holders direct access to purchasing Bitcoin. This led to pushback from the US Department of Justice, which said it had “grave concerns” for retirement savers adopting Bitcoin, as well as from multiple US Senators, with Senator Elizabeth Warren calling the development “immensely troubling.” 

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