According to Bloomberg, EDX Markets, a cryptocurrency trading platform supported by Citadel Securities and Fidelity Digital Assets, plans to establish an exchange in Singapore and offer spot and perpetual futures trading services. EDX CEO Jamil Nazarali stated that the company has completed its second round of financing led by new investor Pantera Capital and existing supporter Sequoia Capital. The newly raised funds will be used for developing new technologies and expanding EDX’s business in overseas markets. EDX is currently seeking approval from the Monetary Authority of Singapore (MAS) to operate the exchange in Singapore. Nazarali emphasized that as a “non-custodial” exchange, EDX does not provide cryptocurrency custody services. However, the company offers institutional investors a platform to directly buy and sell cryptocurrencies such as Bitcoin, Ether, and Litecoin, allowing them to hedge their exposure to ETF products. To attract institutional investors, EDX has established its own clearinghouse and outsourced the role of custodian to Anchorage Digital to avoid potential commingling of funds. In the non-custodial model, EDX does not require investors to deposit funds in fiat or cryptocurrency form before trading cryptocurrencies. Instead, users deposit their net amounts into their Anchorage accounts within the settlement period, and they can withdraw their profits after daily settlements without affecting their trading limits. Following the criticism faced by cryptocurrency exchanges for failing to separate custody, market-making, and trading businesses, as it could lead to conflicts of interest and fund manipulation, Paul Veradittakit, a managing partner at cryptocurrency investment firm Pantera, stated that in the current cryptocurrency environment, it is necessary to provide a non-custodial service for institutional participants to manage risks and provide infrastructure to address complexities in liquidity and operational efficiency. EDX’s other supporters include well-known figures in the traditional finance industry, and the latest round of investors includes existing supporters Citadel Securities, Virtu Financial, Sequoia Capital, and Fidelity Digital Assets. According to sources, the price per share acquired by investors in this round of financing was twice the initial investment in 2022. Other investors in EDX include Charles Schwab Corp., GSR Markets, GTS, Hudson River Trading, Miami International Holdings Inc., and Paradigm. According to EDX, its clients had a nominal trading volume of over $1.4 billion in December, and its clearinghouse has cleared over $3.1 billion in transactions since its launch in October last year. Nazarali mentioned that EDX’s clients traded over $100 million in a single 24-hour period this month after the approval of the Bitcoin spot ETF. Nazarali observed that the trading prices of larger Bitcoin ETFs were higher than the market’s expected fair value, while smaller ETFs had discounts. He stated that there are arbitrage opportunities, but one must deal with actual coins to achieve that.
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