Crypto exchange EDX Markets, backed by Citadel Securities, has submitted an application to the Office of the Comptroller of the Currency to secure a national trust bank charter. The move is part of efforts to integrate digital asset companies into the banking system.
The application was made public through filings on April 1. The application outlines the plan to expand operations while under federal supervision. The company, EDX Markets, will operate under the regulated banking system.
According to the company, the charter will enable them to offer custody and asset management services. The company will also offer principal trading services. The order-matching platform will continue to function as before.
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Citadel Securities Backs New Structure
According to EDX Markets, the operations involving custody and settlement will now fall under the regulated system. The operations will be part of the banking system. The operations will now be in line with the financial regulations.
The company, backed by Citadel Securities, said that the current platforms have multiple functions. The platforms have functions that are often in conflict with each other. The operations are also prone to increased risk.
In the application, EDX Markets proposed the separation of the functions. The company proposed the use of the trust bank model.
The model separates the operations involving custody and settlement from trading. The model is based on the traditional financial market model.
Citadel Securities is behind the market structure model proposed by EDX Markets. The model is based on the traditional financial model. EDX Markets wants to apply the same model.
Policy Shift Supports Crypto Integration
The chief executive, Tony Acuna-Rohter, said large financial institutions are expected to participate in the adoption of digital assets. He noted that institutional clients need to be provided with a system that is regulated for custody. The charter would help meet these requirements.
The application was made at a time when US regulators are becoming increasingly receptive to crypto firms. Other firms have also made applications for similar charters. The applications are aimed at operating under federal supervision.
The regulators conditionally approved applications from Circle Internet Group and Ripple in December. The approvals allowed the firms to make progress toward trust bank status. The approvals signaled a change in US policy regarding crypto assets.
EDX Markets noted that its business model would help reduce systemic risks. The firm noted that its model would separate trading and custody. The approach is commonly used for equities and derivatives markets.
The firm noted that traditional markets, such as equities and derivatives, separate exchanges, brokers, and custody. The approach eliminates any conflict that may exist between execution and asset management. It also ensures that client assets are protected.
EDX Expands Institutional Focus
EDX Markets, founded in 2022, targets institutional participants. One of the major backers of EDX Markets is Citadel Securities. The list of backers also includes Virtu Financial, Fidelity Digital Assets, and Hudson River Trading.
The EDX Markets platform was built around a model where trading, custody, and settlement would be separated. The model resembles traditional financial systems. It has been built around operational efficiency.
If approved, EDX Markets would be allowed to offer more services under the OCC charter. EDX would be allowed to offer custody and fiduciary services. It would be allowed to manage client assets.
Citadel Securities has been one of the major backers of EDX Markets. The involvement of Citadel Securities shows how EDX Markets targets institutional participants in crypto markets. The results of the application will decide what comes next.
National trust banks have the authority to manage portfolios and assets. They operate under regulatory supervision. Approval would give EDX Markets a formal structure within the banking system in the United States.
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