The Pomp Podcast
Edward Woodford: Building A Regulated Crypto Exchange
- Edward Woodford co-founded Seed CX, a CFTC-regulated swap execution facility that began with agricultural derivatives (hemp, avocados, limes) and pivoted to digital assets about two years ago.
- SeedCX is launching an institutional trading platform for spot and physically settled derivative products, targeting high-touch service for ~200 customers rather than millions of retail users.
- The exchange implements strict compliance: employees are banned from trading digital assets, the company does not trade against clients, and market surveillance uses 30+ automated alerts monitored by specialists to prevent manipulation, wash trading, and fat-finger errors.
- Regulatory frameworks differ significantly: the CFTC uses principles-based regulation (15 core principles) while the SEC is rules-based; digital assets should not have asset-specific regulation but instead fall under existing commodity or securities law.
- Market structure design matters for institutions: SeedCX uses high minimum order sizes (one Bitcoin) and $5 tick sizes to prevent order-book fragmentation and reduce tax accounting complexity for large traders.
- Woodford believes most current digital asset projects will not exist in 10 years, though the overall asset class will grow significantly; regulation should not distinguish digital assets from other novel products like movie futures or onions.