Today EDX Markets (EDXM) announced it selected Paxos for institutional custody of assets traded by the digital asset exchange. EDXM was unveiled just three weeks ago with a consortium of backers, including Citadel Securities, Fidelity Digital Assets, Schwab, Paradigm, Sequoia Capital and Virtu Financial.
With EDXM, access to cryptocurrencies will be via traditional broker dealers rather than a crypto exchange.
In addition to providing custody services, Paxos will also deploy its settlement solution that enables netting.
“With compliance and security as key differentiators of EDXM’s offering, we are thrilled to partner with Paxos to deliver the gold standard in digital asset custody services to our investors,” said Jamil Nazarali, CEO of EDXM.
“With Paxos’ best-in-class solutions along with MEMX’s technology powering the exchange, EDXM now has all the tools to make institutional-grade digital asset trading available to investors for the first time.”
Paxos is a New York licensed custodian, so client assets are fully segregated. It also has a conditional bank trust charter from the Office of the Comptroller of the Currency. The startup has raised more than $540 million in funding to date.
While many crypto firms state they want to target institutions, Paxos is one of the few that has demonstrated it. Apart from its highly publicized deal with PayPal where it provides crypto brokerage, it also operates stablecoins on behalf of Binance and others.
Additionally, it has its Paxos Settlement Service, an institutional solution that uses tokenized money to settle stock and commodity transactions on a same day basis. Pilot users on the equities side have included Credit Suisse, State Street, ABN Amro, Bank of America, Nomura’s Instinet, Societe Generale and Wedbush. Paxos had a no-action letter from the SEC which has expired, but it has applied for a license as an equity clearing agency. Koch Metals has participated on the commodities side.