At one point in late 2017, the cryptocurrency market was well on its way to reach a cumulative market capitalization of $1 Trillion. Several months later, even though the market’s upward momentum has stopped almost entirely, public interest has not faded at all. Naturally, this has led to an even further influx of investor capital and interest from institutional investors around the world. However, with fraud and scams becoming commonplace and centralized exchanges succumbing to security breaches, the discussion around crypto security has also become more relevant than ever.
To that end, DAEX or Digital Assets Exchange is a startup that believes that a discrete clearing system is the best way to guarantee trade security and reliability. The company is essentially proposing that cryptocurrency trading, clearing and settlement be split and handled by separate entities, with the latter two handled by its own infrastructure based on distributed ledger technology.
In finance, clearing refers to the process by which an organization executes orders between transacting parties and ensures delivery of assets, securities or money on both ends. The procedure takes place after a trade has been matched, and before a settlement is reached. In the equity and securities industry, most trades take place between separate financial institutions or banks. Thus, third party clearing houses are generally the one to facilitate communication between the two. The sole responsibility of these organizations is to establish delivery of orders between the buying and selling parties or entities.
However, even though the concept of clearing houses is well established in the world of institutional finance, the same cannot be said for the digital currency market. That is, until now at least.
