Charles Schwab, Citadel-Backed Startup Is Building Crypto 'Plumbing' for Big Banks

A cryptocurrency exchange called EDX Markets and backed by several Wall Street firms such as Charles Schwab, Citadel Securities, and Fidelity Digital Assets conducted its first trades on Tuesday, signaling some institutions aren’t hightailing it for the hills on crypto despite recent regulatory pressures in the U.S.

It aims to take elements of traditional finance and port them over to crypto, focussing on compliance and mitigating conflicts of interest. EDX also announced it closed a new funding round, bringing firms like GSR Markets and Miami International Holdings into the fold as well.

The exchange’s CEO, Jamil Nazarali, recognized in a statement that institutional investors want access to crypto markets through means that mirror established practices in finance.

“EDX’s ability to attract new investors and partners in the face of sector headwinds demonstrates the strength of our platform and the demand for a safe and compliant cryptocurrency market,” he said. “We are committed to bringing the best of traditional finance to cryptocurrency markets.”

The way David Schwed, chief operating officer at Halborn Security puts it, EDX has built the infrastructure Wall Street banks will need as they enter the space. As countless B2B startups have discovered, it pays to be a trusted vendor to big firms.

“They're building the plumbing and the middleware and the technology to kind of offer that,” he told Decrypt. “So like this, to me, is the right move to build right now. Because whoever enters the space and wants to build on the endpoints on the regulated side is going to need this type of technology.”

EDX’s first trades come just days after BlackRock, the world’s largest asset manager, announced a bit to establish the U.S.’s first spot Bitcoin ETF. And as the Securities and Exchange Commission cracks down on the industry’s preeminent players, Binance and Coinbase, EDX appears poised to help Wall Street enter a crypto fray in flux.

“The window to front-run institutional demand for Bitcoin is closing,” MicroStrategy founder and Executive Chairman Michael Saylor said in a Tweet referencing EDX, among the many commentators in crypto that believe Wall Street is making a concerted push.

Unlike the leading cryptocurrency exchanges of today that offer customers a panoply of digital currencies, EDX offers investors four coins: Bitcoin, Ethereum Litecoin, and Bitcoin Cash. In terms of market capitalization, the tokens account for 67% of the entire crypto market, according to CoinGecko.

The limited listings are likely by design. SEC Chair Gary Gensler has said “everything but Bitcoin” is a security, and the agency ensnared several of the industry’s leading altcoins in lawsuits against Binance and Coinbase weeks ago.

Prior to his role at EDX, Nazarali served as the global head of business development at Citadel Securities, a leading market maker in the U.S. owned by entrepreneur Ken Griffin. Famously, Griffin beat out a group of people in a Sotheby’s auction organized under a DAO that tried to buy a copy of the U.S. Constitution.