What The Fidelity, Schwab and Citadel Create Crypto Exchange Looks Like
It’s not often that financial giants like Fidelity, Charles Schwab and Citadel Securities come together to form a financial entity. But the three heavyweights did just that when they teamed up to launch a new cryptocurrency exchange called EDX Markets. Let’s break down how this new platform will work and what it can offer you as a crypto investor.
A financial advisor can help you add crypto investments to your portfolio and protect you from risk.
Fidelity, Schwab and Citadel Securities launch EDXM
Fidelity, Charles Schwab and Citadel Securities launched a new cryptocurrency exchange called EDX Markets (EDXM). The cryptocurrency exchange will operate independently of these financial institutions, with the possibility of more partnerships in the future.
“We look forward to welcoming more participants to the exchange, who will drive ongoing trading in this important asset class while creating a virtuous cycle of continuously improving liquidity and efficiency supported by MEMX’s cutting-edge technology,” said Jamil Nazarali, CEO of EDXM , in a press release.
Additional financial institutions currently include Sequoia Capital, Paradigm and Virtu Financial Inc., which have joined the partnership with the aim of enabling “secure and compliant trading of digital assets through trusted intermediaries.”
The press release states that EDXM will deliver “better prices for investors than those offered by existing cryptocurrency exchanges” by creating a “highly liquid cryptocurrency ecosystem that aggregates liquidity from multiple market participants to reduce spreads and improve transparency.”
How EDXM handles conflicts of interest and security
EDXM aims to improve customer safety and comply with regulations. The cryptocurrency exchange also wants to eliminate conflicts of interest.
According to the press release, EDXM will remove “conflicts of interest affecting existing cryptocurrency exchanges by separating responsibility for the operation of the exchange from the entities that trade on it.”
The crypto exchange also aims to deliver cost-effective strategies that start with deleting bilateral settlements. To do so, it will leverage its network of digital custodians to net and settle trades on the blockchain. EDXM says this will increase speed and efficiency at a lower cost.
Members Exchange (MEMX) will provide EDXM with the technological infrastructure to achieve these cost-effective trades and protect investments.
“With MEMX-backed digital infrastructure eliminating technological and organizational bottlenecks, EDXM will be a safe entry point to crypto and serve as the exchange of choice for trading digital assets on a platform designed for and used by leading financial institutions,” the Board of Directors of EDXM said in the press release.
Benefits and risks of trading on a crypto exchange
EDXM can offer crypto investors a cheaper and safer way to trade digital currencies. But you should carefully weigh both the benefits and the risks before you act.
In March 2022, the Department of Labor asked 401(k) plan administrators to “exercise extreme caution” before adding cryptocurrency investments to their retirement plans.
In addition, Chicago-based financial firm Morningstar had pointed out a month earlier that the correlation between cryptocurrencies such as Bitcoin and other major asset classes had increased over the past few years, changing how investors might want to add or exclude it from their portfolios.
The bottom line
The creation of a crypto exchange by financial giants Fidelity, Charles Schwab and Citadel Securities is no small feat. Despite the concerns regarding the crypto market, financial institutions still see cryptocurrency as a potential financial gain. However, before trading on EDXM, investors should consider both the benefits and risks, and even consult a financial professional to help them develop an investment strategy.
Investment tips
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A financial advisor can tell you how to work crypto investing into a broader financial strategy. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three financial advisors serving your area, and you can interview your advisor matches at no charge to determine which one is right for you. If you’re ready to find an advisor who can help you reach your financial goals, get started now.
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Investing in crypto can be fun and interesting, but don’t bet your retirement on it. Make sure you fund your 401(k) first, if you have access to one, or an IRA if you don’t.
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