EDX Markets, a prominent institutional crypto exchange, made a splash on June 20, 2023, with its announcement of a partnership with Anchorage Digital. Anchorage Digital, a regulated crypto platform known for its financial services and infrastructure solutions, will serve as the custody provider for EDX’s new clearinghouse division, EDX Clearing. This partnership marks a significant step towards bridging the gap between traditional finance market structures and the rapidly growing digital asset ecosystem.
The Role of a Clearinghouse
A clearinghouse acts as a financial intermediary, facilitating the settlement of trades between two parties in various markets, including stocks, bonds, derivatives, and other securities. Its primary functions are to ensure the smooth execution of trades and mitigate the risk of loss due to unfulfilled obligations. With the introduction of EDX Clearing, EDX aims to streamline the settlement process and enhance capital and operational efficiency.
Jamil Nazarali, CEO of EDX, emphasized the significance of the partnership with Anchorage Digital. He highlighted the unmatched security, governance, risk management, and compliance framework of Anchorage Digital. As the only federally chartered crypto bank in the U.S., Anchorage Digital is well-positioned to collaborate with EDX in building a robust and compliant clearinghouse operation. Security and compliance remain paramount in the cryptocurrency space, and this partnership demonstrates EDX’s commitment to ensuring the safety of its exchange members.
The Importance of Traditional Finance Insights
Diogo Mónica, Co-Founder and President of Anchorage Digital, echoed Nazarali’s sentiments and stressed the importance of drawing insights from traditional finance. Mónica stated that custody and exchange functions should remain separate for institutional investors, a lesson derived from Anchorage Digital’s own experience. By recognizing the need to align with established financial practices, the partnership between EDX and Anchorage Digital paves the way for the next evolution of institutional crypto.
EDX Markets has garnered support from a consortium of major financial institutions, solidifying its position as a leading player in the crypto market. Notable backers include Citadel Securities, Fidelity Digital Assets, Virtu Financial, Charles Schwab, Sequoia, Paradigm, and more. The involvement of these well-established institutions underscores the growing importance of digital assets and highlights EDX’s potential to revolutionize the financial landscape.
With a history dating back to 2017, Anchorage Digital brings a wealth of experience and expertise to the partnership. The company offers an array of services, including secure custody, regulatory compliance, and robust platform capabilities. By partnering with Anchorage Digital, EDX gains access to a trusted custodial entity, ensuring a secure foundation for its exchange members.
Creating a Tailored Digital Asset Marketplace
EDX Markets differentiates itself by positioning as a digital asset marketplace catering to both crypto-native firms and top financial institutions. This all-inclusive approach aims to bridge the gap between these two worlds and foster greater collaboration and utilization of digital assets. With the partnership with Anchorage Digital, EDX takes a formidable step towards realizing its vision.
The partnership between EDX Markets and Anchorage Digital represents a crucial milestone in the maturation of the institutional crypto space. By leveraging Anchorage Digital’s unparalleled security and compliance capabilities, EDX aims to build a robust and compliant clearinghouse operation. As the digital asset ecosystem continues to evolve, collaboration between traditional finance and crypto becomes increasingly vital, ensuring the smooth integration of these two worlds. EDX, with its esteemed consortium of financial backers and Anchorage Digital’s expertise, is well-positioned to make a lasting impact on the future of digital asset trading.
