Binance CEO Changpeng ‘CZ’ Zhao has described the timing of the launch of a new United States-based cryptocurrency exchange as ‘curious’ as Binance.US and Coinbase face legal battles with the Securities and Exchange Commission.
CZ said, in a Tweet, “Impecible timing” with a screenshot of a news story explaining the launch of EDX exchange, backed by major Wall-street players. However, the Tweet has since been deleted by the Binance CEO.
EDX Markets announced the launch of its digital asset marketplace on June 20, operating on a non-custodial model that will offer Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH) trading to retail and institutional investors.
EDX Markets is also set to launch EDX Clearing, a clearinghouse that will facilitate trades against a central counterparty to give users ‘enhanced price competition’ and reduce settlement risks.
The new exchange launches amid significant regulatory pressure and uncertainty in the U.S. as the SEC pursues legal recourse over cryptocurrency offerings it deems as securities.
The launch of EDX coincided with the close of its latest fundraising round. EDX’s founding investors include a swathe of traditional finance firms that are invested in the cryptocurrency space.
This includes the likes of Charles Schwab, Citadel Securities, Fidelity Digital AssetsSM, Paradigm, Sequoia Capital, and Virtu Financial. The non-custodial exchange was founded in September 2022 .
EDX uses a network of digital custodians to safeguard assets and trades are settled onchain for ‘greater speed and efficiency’. An announcement of the exchange’s foundation highlighted the importance of removing ‘significant conflicts of interest that affect existing cryptocurrency exchanges’ by separating responsibility for operating the exchange from the entities trading on it.
EDX Markets currently offers Bitcoin, Ethereum, Litecoin and Bitcoin Cash trading now that its live. Interestingly, these four cryptocurrencies are exempt from a list of tokens that the SEC has deemed as securities in its legal battles with Coinbase and Binance.US.
As previously explored by CCN, the SEC’s labeling of select cryptocurrencies as unregistered securities has had a cascading effect for exchanges operating in the U.S. Robinhood went as far as delisting Cardano (ADA), Solana (SOL) and Polygon (MATIC) which were all listed in the SEC’s charges against Coinbase and Binance.US.
Interestingly enough, current SEC chairman Gary Gensler categorically stated that Bitcoin, Ether, Litecoin and Bitcoin Cash are not securities in a lecture given back in 2018 during his time as a professor at Massachusetts Institute of Technology.
The SEC has copped criticism from Coinbase in particular, with the exchange going as far as filing a mandamus petition to the federal government demanding the SEC provide clarity on regulations for the cryptocurrency sector.
The regulator subsequently filed for a 120-day extension in which it would provide a recommendation to Coinbase’s rulemaking petition. Coinbase’s Chief legal officer Paul Grewal hit out at the agency for its bipolar stance.
Gensler’s stewardship of the SEC is facing mounting pressure from U.S. senators as well.
House Majority Whip Tom Emmer and Rep. Warren Davidson recently proposed the SEC Stabilization Act, which directly aims to remove Gensler as chair of the SEC and institute reform at the SEC to provide ‘clear and consistent oversight, not political gamesmanship’ of the cryptocurrency space.
Institutions backing the newly launched EDX Markets made their investments in the platform before the SEC began a marked move against the wider cryptocurrency industry.
The limited list of cryptocurrencies EDX will list should steer it clear of regulatory scrutiny while its non-custodial model could also appease regulatory question marks over how it handles user funds.
Despite the SEC’s sharp microscope on the cryptocurrency sector, traditional finance players seem to be gearing up for a renewed expedition into crypto markets. This was made evident in June 2023 as the world’s largest asset manager BlackRock filed for SEC approval of a proposed Bitcoin exchange-traded fund.