"National Team of the United States" Wants to Seize Pricing Power from Encrypted Native Platforms?

Last night, EDX Markets, supported by Citadel Securities, Fidelity Investments and Charles Schwab, officially announced the launch of its digital asset market and completed a new round of financing. Miami International Holdings, DV Crypto , GTS, GSR Markets LTD and HRT Technology participated in the investment.

With EDX Markets announcing the completion of financing, a discussion about the U.S. national team will "take over" the encryption market has been raging for a while.

Judging from the discussions in various communities, there is a big cognitive gap between the Chinese community and the English community in the face of this face-to-face interview. Although Chinese users have heard the names of several institutions, their brand awareness is still different from that of the American market. This also leads to the absence of in-depth discussion (or in-depth speculation) by the community.

**The king of liquidity has entered the game, can traditional capital take away the pricing power of encryption? **

Among the investors of EDX Markets, Citadel Securities is the most noteworthy one and the one closest to the "national team".

In the global financial market, the name of Citadel Securities is widely known. Even in the Chinese world, it is still full of its legends. Its titles include "King of Hedge Funds", "Invisible Giant", "Wall Street Secret" and so on. Although these titles are full of stories and rich metaphors, this is enough to show that this company The company's reputation spread far and wide.

The last time Citadel Securities caused a direct tsunami of public opinion among the retail investor community can be traced back to the surge of GameStop.

In the highly dramatic showdown of "retail investors vs. Wall Street," the short squeeze briefly contributed to a sharp rise in GME. The suspension of trading by Robinhood made it impossible for retail investors to continue to buy, which also triggered a drastic change in the market of GME, and a large number of retail investors suffered losses as a result.

Afterwards, some investors discovered that Melvin Capital suffered a severe setback due to a large number of short positions on GME. Citadel injected capital into Melvin, helping Melvin Capital avoid bankruptcy. Some believe it was for this reason that Citadel Securities directed Robinhood to stop trading in order to save Melvin.

Without a doubt, Citadel Securities is naturally Robinhood's largest market maker. Up to 40% of Robinhood's trading revenue** comes from deals with Citadel Securities. **

Citadel was founded in 1990 by Ken Griffin. At first, Citadel was just a small investment company focused on arbitrage trading, headquartered in Chicago, USA. However, with wise decisions, solid research and excellent risk management, Citadel quickly made a name for itself on Wall Street.

Citadel has stood in the turbulent world of Wall Street for 30 years, and as of December 2022, it manages more than US$62 billion in assets. With more than 2,600 employees, the company is headquartered in Miami, Florida, with offices throughout North America, Asia and Europe.

But this time, it is not Citadel LLC, but Citadel Securities that participated in the investment in EDX Markets. The company was founded by Griffin along with Citadel LLC, which shares the Citadel brand name.

Founded in 2002, Citadel Securities is one of the largest market makers in the world. Provide liquidity and efficient transaction execution for major financial markets around the world. With its innovative trading technology and vast trading infrastructure, the company is one of the largest stock traders in the world.

Citadel dabbled in investment banking until August 2011, but decided to shift its focus to electronic trading and market making. Its business is currently active in more than 50 countries and regions, specializing in providing liquidity and transaction execution services to retail and institutional clients. As of December 2022, Citadel Securities is the most successful hedge fund of all time, with cumulative net gains of $65.9 billion since its inception in 1990.

How did Citadel Securities get started?

In the early days of its establishment, electronic transactions were not yet popular in the market. Citadel Securities is almost the first batch of quantitative funds on the market. Citadel Securities has gradually emerged as the most powerful broker in the US capital market by utilizing its strong technical background and high-frequency trading system. Currently, Citadel Securities is the largest designated market maker on the New York Stock Exchange.

In 2021, at a congressional hearing. A series of questions about Citadel Securities' market dominance ensued. Citadel Securities claims that it processes "approximately 26% of U.S. equity trading volume" and "executes approximately 47% of all U.S. stock market retail trading volume."

In addition to stocks, the company is also a huge player in options, futures, Treasury bonds and many overseas markets. **The firm handled 99% of the volume of the 3,000 US-listed options. **

Gary Gensler, chairman of the SEC, once questioned him: "A company now owns 40% to 50% of retail order flow, how will this affect the capital pricing in this country? In this case, the best What does it mean to execute?"

Back in 2023, the same question still holds true: **Citadel Securities, which holds almost the largest liquidity in the U.S. capital market, and the encrypted trading market dominated and operated by it, will have an impact on the asset pricing of encrypted assets What kind of impact? **

Judging from the information disclosed by EDX Markets this time, the CEO of EDX will be Jamil Nazarali, the former global business development director of Citadel Securities. There is no doubt that this quantitative giant and market maker giant will provide liquidity for the encryption market in the future.

One day, the native encrypted world may lose its dominance in the pricing of encrypted assets, all of which is still unknown.

More "regular" than "regular", 10 trillion-level asset management regular army

Fidelity Investments (Fidelity Investments) is an American multinational financial services company headquartered in Boston, the company has more than 70,000 employees. Founded in 1946, the company has survived for more than half a century. It is currently one of the largest asset management companies in the world. As of December 2022, its total assets under management are US$11.1 trillion, of which disposable assets exceed US$4.2 trillion.

Fidelity is large and diversified, and its investment products cover a variety of asset classes and risk appetites. Its businesses cover all areas of the financial industry, including brokerage services, mutual funds, insurance, fund distribution, retirement services, index funds, and more. As a company with a long history and excellent reputation, Fidelity Investments plays an important role in the financial world.

As we all know, pension funds in various countries have always been a considerable number of institutional investors in the capital market, and their influence and amount of funds cannot be underestimated. However, there are quite high threshold requirements for pension managers.

Currently, Fidelity is the largest provider of 401k retirement planning services. And its pension management business has a long-standing reputation, managing multiple pension funds around the world. To the extent that Fidelity's management business is trusted in multiple jurisdictions, the fund is more "compliant" than "compliant".

Another investor in EDX this time, Charles Schwab, also has a similar situation with Fidelity.

Founded in 1971, Charles Schwab provides banking, commercial banking, investment and other services to retail and institutional clients. As of December 31, 2022, it had $7.05 trillion in client assets. The company has 2.4 million corporate retirement plan participants, 33.8 million active brokerage accounts, and 1.7 million bank accounts.

Active liquidity providers and huge asset management groups, their entry has made the crypto community have different opinions on this.

US Own

When this news fermented, a large number of English media used an interesting word: "encrypted exchanges owned by the United States".

Many community users believe that the timing of EDX Markets' actions is worthy of attention.

As early as September last year, early investors of EDX Markets jointly announced the launch of this encryption exchange project, but it did not cause much shock in the market at that time.

The entry of the "regular army" this time coincided with the SEC's supervision of Binance and Coinbase in turn. The community's doubts about its "vacation of the cage and change of the bird" are naturally quite reasonable guesses. "Impeccable timing," CZ said in a tweet shortly after the news was released, but the tweet was deleted by CZ shortly afterwards.

With the strong support of traditional U.S. capital, the new exchange was launched in the face of major regulatory pressure and uncertainty. However, the model adopted by this exchange happens to circumvent the SEC's supervision of securities.

Not only that, except for exchanges, all traditional capitals are actively entering the encryption market. On the one hand, Crypto-native institutions such as Binance and Coinbase are facing crazy attacks from regulatory agencies such as the SEC. On the other hand, the traditional financial world seems to have accelerated the pace of entry. There were rumors that Fidelity might be considering buying Grayscale.

The traditional financial giants have been taking intensive actions recently, and the regulatory storm seems to have never existed. This positive attitude and the negative attitude of the regulatory side have combined into a scene of ice and fire.

Due to the above reasons, it is natural for the community to distrust Gensler, SEC, and traditional capital. Even within the regulatory layer, the encryption regulation led by Gensler is not fully recognized. Not long ago, House Majority Whip Tom Emmer and Rep. Warren Davidson introduced the SEC Stability Act, which would remove Gensler as SEC chairman and reform the SEC.

Despite the SEC's heavy hammer on the crypto industry, traditional financial players appear to be preparing to re-enter the crypto market. No matter where the encryption market goes in the end, a duel between Crypto Native and Old Money behind EDX may have quietly begun.