Capital markets News

Fidelity backed crypto firm EDX Markets passes $1bn a month, eyes Asia


Yesterday institutional crypto trading venue EDX Markets announced it launched its clearinghouse, EDX Clearing. Plus, it raised a Series B funding round and shared data about its performance so far. Additionally, Bloomberg reported that it plans to open a derivatives exchange in Singapore with the fresh funding. 

EDX didn’t share the Series B round amount, but Bloomberg said the valuation was double that of the Series A. EDX confirmed that a new investor, Pantera Capital, co-led the funding alongside existing investor Sequoia Capital. Other founders participating in the round included Citadel Securities, Fidelity Digital Assets and Virtu Financial. Existing investors include Charles Schwab, DV Crypto, GSR Markets, GTS, HRT Technology, Miami International Holdings and Paradigm.

Cumulative notional value traded since launch is $3.1 billion, with $1.4 billion in December. So far the exchange only supports the spot trading of Bitcoin, Ether and Litecoin, the coins most likely considered commodities by the SEC. Although EDX Markets is backed by several TradFi entities and takes a TradFi approach to trading, it is not a regulated exchange. Hence, there’s no CFTC or SEC oversight. EDX Clearing has a money services license in Illinois.

An Asian crypto exchange

One of the drivers behind the attraction of Singapore is that it won’t be so limited in the range of coins it offers and institutional derivative trading of crypto is not regulated. However, spot trading requires a license, and EDX Markets plans to get approval to launch both spot and derivatives trading. In a nod to the crypto world, it also intends to offer perpetual futures, which have proven popular in the DeFi sector.

EDX in Asia will compete with AsiaNext, a joint venture between Switzerland’s SIX stock exchange and SBI Digital Asset Holdings, which recently launched an institutional crypto derivatives exchange in Singapore. SBI also owns one of the largest crypto market makers, B2C2.

A centralized crypto clearinghouse

EDX previously announced plans for EDX Clearing which is now live. EDX Markets is a non-custodial marketplace, with Anchorage providing digital asset custody for EDX Clearing during the settlement window. Centralized clearing and netting reduces liquidity requirements as well as credit risk. While the exchange operates 24/7/365, settlement happens on business days with a 3 pm cutoff time and completion at 7 pm.

“Institutional crypto investors care more than ever about counterparty risk management,” said Paul Veradittakit, managing partner at Pantera Capital. “Globally we’re seeing institutions gravitate towards non-custodial marketplaces. With its capitally efficient product, best in class risk management, and backing from global financial heavyweights, EDX is primed to usher in a new era of institutional crypto trading.” 

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