Cryptocurrency exchange EDX Markets, which recently launched, is reportedly in final negotiations with Anchorage Digital to serve as its custodian. This comes after EDX Markets terminated its collaboration with Paxos, a blockchain infrastructure firm, as reported by Bloomberg. Paxos was initially intended to be the custodian for EDX Markets, providing customers with direct access to the exchange. However, EDX Markets shifted its focus to a non-custodial offering at launch. Despite the separation, Paxos expressed excitement about the direction EDX is taking and hopes to support its customers with regulated custody when banks and brokers join the platform.
EDX Markets Seeks a Suitable Custodian
EDX Markets has made finding a suitable custodian its main goal. The exchange plans to hold customer assets at a third-party company. With its official launch on June 20, EDX Markets offers trading services for four leading cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC). Anchorage Digital is expected to replace Paxos as the custodian, although no official confirmation has been made by either party regarding the deal.
Past Turbulence for Custodial Options
Both custodial options of EDX Markets have faced challenges in the past. Paxos, which issues stablecoins BUSD and USDP, was reportedly under investigation by the New York State Department of Financial Services (NYSDFS) earlier this year. The reasons for the investigation were unclear. Shortly after, Paxos announced that it would stop minting new BUSD tokens in compliance with guidance from the NYSDFS. The company emphasized that all stablecoins would continue to be backed 1:1 with US dollar-denominated reserves.
Anchorage Digital also encountered regulatory issues with the Office of the Comptroller, leading to a consent order in 2022. The order stated that Anchorage Digital had failed to implement a comprehensive anti-money laundering program. Additionally, like many other crypto firms, Anchorage Digital had to downsize its workforce due to the bear market. In March of this year, the company laid off 75 team members, which accounted for approximately 20% of its total workforce.
The Future of EDX Markets
As EDX Markets continues its search for a suitable custodian, the exchange remains optimistic about its future prospects. With financial backing from prominent finance leaders such as Fidelity Digital Assets, Citadel Securities, Charles Schwab, Paradigm, and Sequoia Capital, EDX Markets has established a strong foundation. The exchange aims to provide a secure and reliable platform for traders to engage in cryptocurrency trading. While the transition from Paxos to Anchorage Digital may introduce some uncertainty, EDX Markets is confident in its decision and looks forward to offering its customers a seamless trading experience.
EDX Markets’ collaboration with Anchorage Digital as its custodian marks a significant development for the recently-launched cryptocurrency exchange. With the support of reputable financial institutions, EDX Markets aims to establish itself as a trusted and efficient platform in the crypto trading industry.