Tech

Fidelity, Schwab, Citadel backing new crypto exchange EDX signals TradFi’s deeper dive into digital assets


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Welcome back to Chain Reaction.

Earlier this week, EDX Markets launched its digital asset platform, the firm shared on Tuesday. But what has made this launch catch a lot of attention? Its founding investors, which include major traditional firms like Charles Schwab, Citadel Securities, Fidelity Digital Assets and Sequoia Capital, alongside Paradigm and Virtu Financial.

The company also recently closed a fresh funding round that brought on additional strategic investors, including Miami International Holdings, DV Crypto, GTS, GSR Markets LTD and HRT Technology. The new capital will be used to help develop EDX’s trading platform, among other elements.

The platform aims to be the “crypto marketplace of choice for industry leaders,” with plans to build on traditional finance practices to provide liquidity, competitive quotes and a non-custodial model to mitigate conflicts of interest, it said. The platform also introduced a “retail-only quote to the crypto markets,” which allows users to get better pricing for retail orders.

The platform will have limited offerings for the foreseeable future, until there is more regulatory clarity, EDX Markets CEO Jamil Nazarali said in April. Current cryptocurrencies that are tradable on EDX are on the lighter side, with only four options: bitcoin, ether, litecoin and bitcoin cash.

The crypto exchange initially made headlines after it was announced in September, two months prior to the FTX collapse, and initially planned on launching in November, Bloomberg reported.

The launch comes at a time when a lot of heat is ramping up for the crypto industry as regulators like the U.S. Securities and Exchange Commission crack down on major crypto exchanges like Binance and Coinbase for allegedly violating securities laws, among other reasons.

The support for EDX also points to a growing interest in digital assets among traditional players — even if the crypto markets are down from all-time highs.

Separately, last week, BlackRock, which has about $9 trillion in assets under management, filed with the SEC to form a spot bitcoin ETF that would be custodied on Coinbase. The filing was through iShares, a fund management unit under BlackRock’s wing.

Although a handful of futures-based bitcoin ETFs exist, the SEC has shot down other firms’ attempts to create spot-based bitcoin ETFs in the past. Given that the filing arrived at a pivotal moment for the U.S.-based crypto ecosystem, there may be some conversations behind closed doors that could be ongoing between BlackRock and the SEC. But whether or not BlackRock has a fighting chance for approval is TBD, but my (not always accurate) crystal ball thinks it’s still unlikely for the asset management giant to get its spot bitcoin ETF approved, given recent regulatory actions that have transpired.

This week in web3

SEC director says ‘nothing has changed’ for enforcement even as the crypto industry rumbles (TC+)

As the U.S. Securities and Exchange Commission continues to scrutinize the crypto industry, the agency’s director of enforcement, Gurbir Grewal, says the regulator is more concerned with securities being sold in a format that adheres to existing laws rather than with labels or technology.

The UK hasn’t lost its appeal for venture capital (TC+)

Having spent part of the week interacting with the U.K’s tech scene, TechCrunch can confirm that reports of its death are greatly exaggerated. VCs keep flocking to London for dealmaking, and many are happy to call it home. The latest move is a16z’s: The firm picked London for a16z crypto’s first international office, set to be led by general partner Sriram Krishnan. And it makes it clear that its conversations with British policymakers and regulators played a role in the decision.

The latest pod

For last week’s episode, I interviewed Patrick Kaminski, the director of digital innovation for web3 and metaverse at L’Oréal, and Manon Cardiel, head of strategic planning and partnerships within web3 and metaverse at L’Oréal.

Patrick is the leader behind NYX Professional Makeup’s GORJS DAO, which launched in mid-January with hopes of combining the NFT world and the beauty industry in the metaverse. While Manon worked on the GORJS project, she also helped launch NFT collections for companies like Mugler and Yves Saint Laurent.

L’Oréal is best known for its beauty products, but the more than 100-year-old company is also home to a plethora of brands that many of us use and own like Maybelline, Yves Saint Laurent, Armani, Kiehl’s, Valentino, Prada, CeraVe and more.

We discussed why L’Oréal wanted to get into the web3 ecosystem, what it’s like incorporating a DAO into a traditional brand and how other brands and companies are — or aren’t — getting into the cryptosphere.

We also dove into:

  • Growing brand loyalty
  • Consumer demand and feedback
  • Brands skepticism of NFTs, metaverse
  • Advice to brands looking to get into web3

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

Follow the money

  1. DeFi infrastructure provider Maverick Protocol raised $9 million
  2. Yield-earning DeFi platform Earn Network raised a $2.7 million seed round
  3. Binance Labs led $10 million round for cosmos-focused smart contract platform Neutron
  4. Singapore-based digital payment provider dtcpay raised $16.5 million in a pre-series A round
  5. TapiocaDAO, a money market powered by LayerZero, raised a $6 million seed round

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

To get a roundup of TechCrunch’s biggest and most important crypto stories delivered to your inbox every Thursday at 12 p.m. PT, subscribe here.





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