Wall Street Embraces Crypto: EDX Markets Launches & BlackRock Files for Bitcoin ETF

During the second half of June 2023, two big events shook the crypto-financial landscape. Major Wall Street players, such as Charles Schwab, Fidelity, and Citadel Securities are launching a new crypto-trading platform called EDX Markets. This platform is targeted towards big institutions to help them onboard into crypto and so far supports BTC, ETH, LTC, and BCH.

At the same time, BlackRock, the world's biggest manager of assets, applied for a Bitcoin ETF (Exchange Traded Fund) with the SEC. These moves point towards an increasing embrace of cryptocurrencies by old-school financial institutions, and they could change the way we invest in crypto in the future. Let's dive deeper into this news:

Top TradFi Institutions Launching a Crypto Platform

The launch of EDX Markets represents a major milestone in the intersection of traditional finance and the emerging cryptocurrency ecosystem. The new cryptocurrency trading platform is backed by some of the most prestigious names in traditional finance. Charles Schwab, Fidelity Investments, and Citadel Securities have all lent their support to EDX Markets, marking a clear shift in the way these established institutions are approaching the crypto sphere.

EDX Markets made its debut by offering trading services for four of the most well-known cryptocurrencies: Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). Despite being a newcomer, EDX has attracted notable strategic investors such as Miami International Holdings, DV Crypto, Global Trading Strategies, GSR Markets, and Hudson River Trading in its recent funding round. The arrival of EDX Markets in the crypto exchange arena marks a significant step in the evolution of the crypto landscape, signifying a growing acceptance and integration of digital assets in the traditional finance sector.

How will EDX Markets Work?

In an effort to distinguish itself from other crypto exchanges and appeal to traditional finance institutions, EDX Markets operates on a non-custodial model. Unlike typical cryptocurrency exchanges, which hold their customers' digital assets, EDX does not custody its users' cryptocurrencies. Instead, it utilizes financial intermediaries to execute buy and sell orders, mirroring the operational mechanism of traditional stock exchanges like NYSE and Nasdaq.

This setup aims to calm worries about potential bias and provides stronger safety measures for its users. Moreover, it helps the exchange to stick to proven methods from the traditional finance world, giving major players exclusive benefits like better price competition, reduced risks tied to settling trades, and more efficient operations. In the future, EDX plans to introduce EDX Clearing, its own system to settle completed trades, which would further enhance the safety and productivity of its services.

Why Now?

The timing of EDX's launch is noteworthy. It comes amid increased scrutiny by regulators like the SEC over the crypto industry. However, the non-custodial approach adopted by EDX may help circumvent some of the regulatory hurdles, by separating the exchange function from the broker-dealer function, a model that regulators have traditionally favored.

Additionally, the recent filing by BlackRock for a Bitcoin ETF suggests that institutional interest in cryptocurrencies remains high, despite regulatory concerns. The launch of EDX could be seen as a response to this growing demand, offering a platform that combines the best practices from traditional finance with the unique advantages of digital asset trading.

New “BTC ETF” by BlackRock

Simultaneously, BlackRock, the world's largest asset manager, has taken a giant leap into the crypto world by filing for a “Bitcoin ETF” (technically a BTC trust) with the SEC. This comes as a significant move, given that BlackRock manages over $9.5 trillion in assets. The proposed Bitcoin ETF is not BlackRock's first foray into crypto; the company launched a spot bitcoin private trust for institutional clients in the U.S. last year.

Interestingly, BlackRock's Bitcoin ETF application comes amid a period of intense scrutiny from the SEC, which has yet to approve any spot Bitcoin ETFs due to concerns about market manipulation. However, BlackRock's reputation and extensive experience in handling ETF applications could potentially shift the odds in its favor.

Holding BTC without BTC?

The concept of a Bitcoin ETF represents a significant departure from traditional Bitcoin investing. If BlackRock's ETF is approved, investors would have the opportunity to gain exposure to Bitcoin without having to buy and hold the cryptocurrency themselves. Instead, the ETF would track the price of Bitcoin, enabling investors to speculate on its price movements without the need for a digital wallet or dealing with the complexities of cryptocurrency storage and security. This simplification of the investment process could open the door for more widespread adoption of Bitcoin as an asset class.

Why is This Good News

Both the launch of EDX Markets and BlackRock's Bitcoin ETF application represent significant progress in the integration of cryptocurrencies into mainstream finance. The positive market reaction, marked by significant price increases for Bitcoin, Ether, and other major crypto assets, highlights the optimism surrounding these developments.

BTC/USD price chart after BlackRock and EDX Announcements

If these initiatives prove successful, they could pave the way for increased institutional investment in the crypto market. The presence of more institutional players in the crypto space could lead to higher liquidity, reduced volatility, and a more mature market overall. This demonstrates the potential of these developments to significantly reshape the crypto landscape.