Recently, it has been observed that crypto exchanges are increasingly active in competing for institutional clients. EDX Markets, an exchange supported by several traditional financial giants, has applied for a national trust bank license from the U.S. Office of the Comptroller of the Currency. What does this mean? Once approved, they will be able to offer custody, asset management, and proprietary trading services through an independently regulated trust entity, rather than simply building a matching platform.

This is a quite interesting phenomenon. Traditional financial institutions entering the digital asset market first need to solve the trust issue. What do institutional investors want to see? Segregated custody, clear settlement processes, and regulated entities that can reduce counterparty risk. EDX’s move is using the logic of traditional finance to build digital asset infrastructure. Since launching in summer 2023, the platform has expanded from four assets to over twenty, supporting mainstream cryptocurrencies like Bitcoin and Ethereum.

But there are also cautionary examples. The recent situation with WLFI tokens is quite noteworthy. According to the latest data, this crypto project related to a certain political figure saw its token drop 13.5% within 24 hours, hitting a new low since launch. Where did the problem lie? The project used its governance token as collateral to borrow stablecoins, then drained the funds from the lending platform’s liquidity pool. This directly exposes a systemic risk in DeFi: when the collateral’s price drops, the entire leverage structure begins to collapse. As WLFI’s price falls, borrowing capacity weakens, collateral concentration increases, and ultimately other depositors suffer.

Comparing these two cases, the difference is quite clear. One is using a regulated, segregated trust structure to attract institutional capital; the other relies on a self-sustaining token model to maintain the ecosystem. This also explains why more and more crypto companies are vying for trust licenses — they are a key bridge connecting traditional finance and digital assets. Institutional investors want transparent, controllable, and secure infrastructure.