EDX Markets Withdraws Plans to Use Paxos as Custodian (Report)

2023-06-28 11:02:00

The recently-launched cryptocurrency exchange EDX Markets will reportedly not rely on Paxos to serve as a custodian. According to rumors, the entity is in final talks with Anchorage Digital, which could fit that role

EDX Markets went live last week and received financial backing from multiple finance leaders, such as Fidelity Digital Assets, Citadel Securities, Charles Schwab, Paradigm, Sequoia Capital, and more.

Changing the Partner

Asreported by Bloomberg, EDX Markets has terminated its collaboration with the blockchain infrastructure firm Paxos. Should they have remained associates, the latter would have served as a crypto custodian, whereas its customers would have had direct access to the recently introduced exchange. Despite the ceased partnership, a Paxos spokesperson said:

“EDX shifted to focus on a non-custodial offering at launch. We are very excited about what EDX is building, and we hope to support EDX customers with our regulated custody when banks and brokers onboard to the platform.”

EDX Markets’ is expected to replace Paxos with Anchorage Digital. However, the entities have not yet commented on the deal

Picking a suitable custodian seems like the main goal for the exchange, which said that customer assets will be held at a third-party company. The marketplace officially launchedoperations on June 20, allowing trading services with four of the leading cryptocurrencies – Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC)

The Shaken Condition of Paxos and Anchorage Digital

It is worth noting that both custodial options of EDX Markets have gone through some severe turbulence lately.

Paxos – the entity that issues the stablecoins BUSD and USDP – was reportedly under investigationby the New York State Department of Financial Services (NYSDFS) in February this year. Nonetheless, the exact reason for the examination was unclear

Just a few days later, Paxossaid it will stop minting new BUSD tokens in accordance with the watchdog’s guidance. The firm assured it will keep managing BUSD reserves, saying all stablecoins have and “always will be backed” 1:1 with US dollar-denominated reserves

For its part, Anchorage Digital had regulatory issues with the Office of the Comptroller. The latterissueda consent order in 2022, claiming the former has failed to implement a comprehensive anti-money laundering program.

Anchorage Digital was also among the countless crypto firms that had to dismiss staff members due to the bear market. Itfired75 team members (around 20% of the total workforce) in March this year

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