Fidelity, Citadel, and Charles Schwab Team Up to Form Crypto Exchange

September 19, 2022 12:35:00

Despite significant challenges, the cryptocurrency market seems to be gaining more acceptance each day. Corporations and governments across the world are adopting blockchain into their systems to take advantage of the enhanced security offered by the decentralized technology. Furthermore, companies are investing billions of dollars into cryptocurrency firms in anticipation of a future where crypto plays a significant role in the economy.

In a move that is sure to send shock waves through the industry, financial giants Fidelity Digital, Citadel Securities and Charles Schwab have jumped into the crypto market in a major way. The trio announced in a recent press release that they had partnered to create a Bitcoin and cryptocurrency exchange platform dubbed EDXM (EDX Markets).

The first crypto exchange of its kind, EDXMarkets will be led by Jamil Nazarali, a former executive at Citadel Securities, and will be aided by ventures such as Paradigm, Virtu Financial and Sequoia Capital. The consortium of financial firms launched it with the promise of delivering faster, safer and much more efficient crypto trading.

The three financial behemoths revealed that their exchange will leverage technology built by an equity exchange called the Member Exchange (MEMX) to scale its operation and allow it to serve institutional as well as retail investors in numerous markets. Former Citadel Securities global head of business development and new EDX Markets CEO Nazarali said in the press release that the trio of companies looked forward to bringing in additional participants to the cryptocurrency exchange.

Nazarali said that the exchange would push ongoing trading in the crypto asset class while simultaneously creating a cycle of “continually enhanced liquidity and efficiency” thanks to the cutting-edge technology from MEMX. By using blockchain technology to net and settle trades, EDX Markets plans on getting rid of costly bilateral settlements. The exchange’s board of directors talked about how cryptocurrency market capitalization could unlock demand for millions of new market participants.

The board noted that for the nascent crypto market to unlock this demand, it will have to address the needs of retail traders as well as institutional investors who have high security and compliance standards. EDX Market will try to achieve this by coupling tested and proven blockchain technology from MEMX with best practices from the traditional money markets as well as tighter spreads. It will allow for an extremely liquid crypto ecosystem capable of aggregating liquidity from several money market markers to improve transparency in transactions and reduce spreads.

As financial system heavyweights such as Citadel and Charles Schwab enter the crypto space, the ripple effects are likely to rub off on other sector players, including Riot Blockchain Inc. (NASDAQ: RIOT) since the entry of those big players is an undeniable endorsement of the industry.

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