EDX Markets reportedly drops Paxos as planned custodial partner

EDX Markets, a nascent crypto speech supported by Charles Schwab, Fidelity, and Citadel Securities, has reportedly ended its intended relation with Paxos and is nearing an statement with Anchorage Digital, according to Bloomberg.

Previously, EDX Markets had announced a concern with Paxos successful October of past year. The New York-based blockchain firm, known for issuing Binance stablecoin BUSD, would person served arsenic the custodian for EDX’s clients’ crypto assets portion besides providing nonstop EDX entree to Paxos customers. This program has present been abandoned.

Anchorage Digital, based successful San Francisco, is simply a US crypto custodian that possesses a slope charter from the Office of the Comptroller (OCC). Despite disapproval from the OCC successful 2021 regarding the lack of cardinal anti-money laundering controls, the institution agreed to marque indispensable corrections. Anchorage, valued astatine implicit $3 cardinal pursuing a backing circular successful 2021, reduced its unit by astir 20% successful March.

EDX’s CEO, Jamil Nazarali, stated past week that the institution is cooperating with a third-party custodian, but declined to sanction the caller partner. Both EDX Markets and Anchorage Digital chose not to remark connected the matter.

EDX’s website presently lists Anchorage arsenic a partner, though Paxos is notably absent. A Paxos spokesperson commented, “EDX shifted to absorption connected a non-custodial offering astatine launch. We are precise excited astir what EDX is building, and we anticipation to enactment EDX customers with our regulated custody erstwhile banks and brokers onboard to the platform.”

The prime of a custodian for EDX is indispensable owed to the exchange’s non-custodial model, which contrasts with existing crypto platforms specified arsenic Coinbase and Binance Holdings Ltd. by not holding clients’ integer assets during transactions.

Paxos’ regulatory issues

Paxos has faced regulatory scrutiny from respective directions successful the past year. New York State ordered Paxos to halt issuing its Binance-branded stablecoin, BUSD, successful February. Furthermore, Paxos received a Wells announcement from the US Securities and Exchange Commission successful February, signaling that the regulator was investigating the steadfast and considering litigation.

Paxos has disputed these charges and indicated its willingness to support itself successful court. Meanwhile, an SEC authoritative alleged that Binance, a starring cryptocurrency exchange, sent astir $20 cardinal successful commingled funds to Paxos successful 2021 done Merit Peak Ltd., a trading firm. To date, the SEC has not filed charges.