Backed by Wall Street financial giants, what exactly is the cryptocurrency trading platform EDX Markets?
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Backed by Wall Street financial giants, what exactly is the cryptocurrency trading platform EDX Markets?
In a sense, EDX Markets is indeed the well-behaved child that the SEC and Wall Street would favor.
Navigating Web3 tides with focused insightsBy: 0xmin
Amid the U.S. SEC's regulatory storm sweeping across the crypto world, a piece of exchange news has captured widespread attention.
EDX Markets, a new cryptocurrency trading platform backed by Wall Street heavyweights including Citadel Securities, Fidelity Investments, and Charles Schwab, has begun executing trades in recent weeks and is expected to officially launch later on Tuesday local time. The platform has also secured funding from Sequoia Capital, Paradigm, and Virtu Financial, and is specifically designed for institutional investors. It will support trading of four cryptocurrencies—Bitcoin, Ethereum, Litecoin, and Bitcoin Cash—all of which are currently not classified as securities by the U.S. SEC.
In contrast to recent lawsuits filed by the SEC against major crypto exchanges Binance and Coinbase, many have speculated: Is the SEC clearing the way for Wall Street’s own crypto trading platforms?
What exactly is EDX Markets?
In a sense, EDX Markets is indeed the kind of well-behaved player that both the SEC and Wall Street would favor.
Unlike traditional crypto exchanges such as Binance and Coinbase, EDX Markets operates a non-custodial model, meaning it does not hold customers' digital assets during trading, thereby reducing custody risks. Instead, EDX primarily facilitates order matching between buyers and sellers, functioning similarly to traditional exchanges like Nasdaq or the New York Stock Exchange.
Jamil Nazarali, CEO of EDX Markets, said the platform will collaborate with third-party custodians. It also plans to launch a clearing house called EDX Clearing later this year to settle transactions conducted on the EDX Markets platform.
Previously, SEC Chair Gary Gensler directed that crypto exchanges must comply with securities laws just like traditional asset markets. He pointed out that current crypto exchanges combine multiple functions—something unusual in traditional finance, where an entity like the NYSE wouldn't operate like a hedge fund engaging in market-making. In effect, he believes today’s exchanges are too powerful, combining trading, market-making, and custody under one roof.
EDX Markets appears designed precisely to address this regulatory criticism—stripping away market-making and custody functions to become a pure-play trading venue, akin to a Nasdaq for the crypto world.
Nazarali clearly aligns with Gensler’s vision. He stated, “Regulators expect crypto exchanges not to double as broker-dealers, just as in traditional financial market structures—and this creates an opportunity for EDX. Cryptocurrencies are here to stay, and for them to evolve into a legitimate asset class, they need to adopt rules and investor protections from traditional finance. That gives EDX significant room to grow.”
A second distinguishing feature: EDX Markets is an institutional-only trading platform, avoiding direct service to retail investors and offering API-based trading access instead of a traditional front-end user interface.
Notably, EDX Markets is backed by a powerful Wall Street consortium.
Schwab and Fidelity are among the largest retail brokerage firms in the U.S., while Citadel and Virtu are top-tier Wall Street market makers.
I consulted Auntie Zhang, a janitor working on Wall Street, who happened to be from my hometown, and she gave me a crash course on Wall Street’s power dynamics.
Old Guard: Represented by traditional investment banks like Morgan Stanley and Goldman Sachs, these institutions benefit from opaque bid/ask spreads in B/C (wholesale/retail) trading and prefer non-transparent over-the-counter (OTC) transactions.
New Faction: Comprised of firms like Knight Capital, Citadel, DRW, and WorldQuant—these players built their businesses on massive investments in technology, speed, and talent, and are generally younger. For example, Citadel is the payment-for-order-flow partner of Robinhood, which itself competes directly with traditional Wall Street brokerages.
The rivalry between these two factions resembles the broader battle between big banks and big tech companies, each holding advantages in regulation and technology, respectively.
For instance, in 2018, market maker Citadel launched a CLOB (central limit order book) for U.S. Treasuries. Traditional fixed-income trading desks benefited from opacity—OTC, non-electronic trading without best bid/best offer quotes or public order books. Citadel’s CLOB turned fixed income into a transparent market, clearly challenging the long-standing dominance of large banks.
Now, EDX Markets’ future direction seems clear: to provide a high-transparency market, strictly adhering to regulatory compliance by offering only non-custodial trade matching services exclusively for institutional investors.
EDX Markets represents a strategic move by Wall Street’s new guard—an attempt to replicate the traditional financial market architecture within the crypto space, meeting regulatory standards and potentially evolving into a small but alternative crypto Nasdaq.
On the positive side, it offers a seemingly compliant pathway for traditional capital to enter crypto. On the other hand, it lacks excitement—it is not the “exchange of the future” that the crypto community envisioned. What comes next remains to be seen.
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