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EDX, a cryptocurrency exchange launched a week ago backed by heavyweights such as Citadel Securities, Fidelity Digital Assets and Charles Schwab, is reportedly preparing to switch custodial providers from Paxos Trust to Anchorage Digital. EDX uses a non-storage business model designed to eliminate conflicts of interest.
EDX supports trading of four cryptocurrencies – Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). At the time of writing, BCH is up 70.43% in the week since EDX went live and 101.36% in the last month.
EDX announced its partnership with Paxos to “facilitate the storage and infrastructure of digital asset wallets” in October, shortly after the exchange’s launch announcement. Since then, the U.S. Securities and Exchange Commission has announced a proposal to introduce stricter custody rules for cryptocurrency firms. A Paxos spokesperson told Cointelegraph:
“EDX switched to a non-custodial offering at launch. We are very excited about what EDX is building and look forward to supporting EDX customers with our managed custody as banks and brokers join the platform.”
Blockchain infrastructure platform Paxos has a so-called BitLicense from the New York City Department of Financial Services. The agency was reported to have investigated Paxos earlier this year for an unspecified reason. Paxos received “tentative conditional approval” for a US bank charter from the US Controller of the Currency (OCC) in 2021, but that approval reportedly expired at the end of March.
Related: Subsidiary Prometheum Receives FINRA Approval for Escrow of Digital Assets
Anchorage Digital was the first cryptocurrency firm to receive a national trust bank charter from the OCC in January 2021. A year later, she confronted this regulator over anti-money laundering (AML) deficiencies and agreed to a consent order. Shortly thereafter, Anchorage Digital formed a custodial network with the Binance cryptocurrency exchanges. US, CoinList, Blockchain.com, Strix Leviathan and Wintermute.
1/ EDX Markets, a non-custodial exchange, went live today.
That sounds like a contradiction right?
Here’s background on EDX and initial thoughts. pic.twitter.com/cPqARF5BmG
— Ram Ahluwalia, higher for longer cryptocurrency CFA (@ramahluwalia) June 20, 2023
EDX plans to introduce EDX Clearing, a clearing house for clearing trades made on the EDX Markets platform, later this year. EDX declined to comment on its custodial provider’s question, and Anchorage Digital did not respond to a request for comment.