In order to avoid a conflict of interest and a contentious situation with the SEC, the new exchange does not hold customer funds in its own custody.
A week after its debut, the cryptocurrency exchange EDX is apparently getting ready to shift custody companies. The exchange, which is supported by major players in traditional finance like Citadel Securities, Fidelity Digital Assets, and Charles Schwab, plans to replace Paxos Trust with Anchorage Digital. A noncustodial business strategy is used by EDX to avoid conflicts of interest.
![EDX to Switch Custody Providers from Paxos to Anchorage image 221](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/06/image-221.png?resize=1024%2C598&ssl=1)
![EDX to Switch Custody Providers from Paxos to Anchorage image 221](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/06/image-221.png?resize=1024%2C598&ssl=1)
Litecoin, Bitcoin Cash, Ether, and Bitcoin are the four cryptocurrencies that the exchange currently supports trading in. Notably, the value of Bitcoin Cash (BCH) has significantly increased since the launch of EDX, with a 70.43% week-over-week gain and a 101.36% month-over-month increase.
Related: Crypto bank Anchorage Digital cuts 20% of staff, citing regulatory uncertainty
The alliance between EDX and Paxos to facilitate custody and wallet infrastructure for digital assets was first announced in October. However, the Securities and Exchange Commission of the United States (SEC) recently proposed harsher custody regulations for cryptocurrency enterprises, which may have encouraged EDX to think about switching custody providers.
A BitLicense is held by Paxos, a blockchain infrastructure platform, from the New York Department of Financial Services. There were rumors that the New York agency was looking into Paxos earlier this year for unknown motives. The United States Comptroller of the Currency (OCC) also granted Paxos “preliminary conditional approval” for a U.S. bank license in 2021, however this approval reportedly lapsed in March.
In January 2021, the OCC granted a national trust bank charter to Anchorage Digital, the prospective new custody provider for EDX. This became Anchorage Digital the first cryptocurrency company to do so. However, because to shortcomings in anti-money laundering, it came under examination from the regulator a year later and signed into a consent order. After that, Binance.US, CoinList, Blockchain.com, Strix Leviathan, and Wintermute joined forces with Anchorage Digital to build a custody network.
Later this year, EDX intends to launch EDX Clearing, a clearinghouse to settle trades made on the EDX Markets platform. This growth shows that EDX wants to go beyond only providing basic bitcoin exchange capability for its trading infrastructure and services.
Related: SEC Claims Binance Sent $20B in Commingled Funds to Paxos
EDX declined to comment on the subject of switching custody providers, implying that the choice is still being made or is not yet ready to be made public. Companies frequently wait until the end of discussions or adjustments to make comments about them.
A request for comment from Anchorage Digital was not answered, therefore it is unclear what position they would take or whether they would confirm the potential custody agreement with EDX.