US CFTC Relies on AI to Offset Staffing Cuts Amid Growing Crypto and Prediction Market Responsibilities

The US Commodity Futures Trading Commission is leveraging artificial intelligence and automation to cope with significant new regulatory responsibilities, according to Chairman Mike Selig's congressional testimony, despite a substantial decline in the agency's workforce under the Trump administration. Approximately a quarter of the CFTC's staff has departed since 2025, due to President Trump's demands for a reduced federal workforce, as per agency records. However, the CFTC is also tasked with overseeing the rapidly expanding realms of cryptocurrency and prediction markets. Selig stated that AI tools will be instrumental in surveillance and investigations, and are being integrated into various workflows, citing the widespread use of Microsoft's Copilot AI tool as a productivity aid. When questioned about staff declines, Selig asserted that the agency is operating more efficiently and effectively. Committee Chairman Glenn 'GT' Thompson noted that the CFTC is being assigned a substantial workload with digital assets and prediction markets, and sought assurance that Selig would request assistance if the need for additional qualified staff arises. Selig confirmed that he would do so. He emphasized that proper market enforcement is a top priority, although the CFTC's budget request for the next year only asks for three additional enforcement staff, which would still be about 23% shy of the 140 staff members the division had in 2025. The Digital Asset Market Clarity Act, currently being worked on by the Senate, would place the CFTC in a central role in regulating non-securities crypto trading, including transactions in leading assets such as bitcoin and Ethereum's ether. The agency is also claiming a dominant legal jurisdiction over prediction markets, such as those operated by Polymarket and Kalshi, which have grown from millions to billions of dollars in a year. Selig's predecessor, former Chairman Rostin Behnam, had argued that the agency would require more personnel to oversee crypto and lacked the resources to police the expanding prediction markets. During Selig's tenure, the prediction markets have been marred by accusations of insider trading, with some cases being addressed by the firms themselves. The markets have drawn scrutiny over certain trades related to US military actions and government statements, suggesting potential insider trading by individuals with government insight. Selig acknowledged numerous ongoing investigations in prediction markets but declined to quantify or discuss their focus. He stated that regulated platforms are the first line of defense against insider trading, fraud, and market manipulation, while the CFTC serves as a second line of defense. The chairman noted that his agency regularly rejects contracts and is actively reviewing the markets, with a zero-tolerance policy for illicit activity. Representative Angie Craig argued that the agency's workforce is overstretched, particularly given its role as the primary regulator of two of the fastest-growing and most volatile markets. Craig emphasized the need to provide the CFTC with the necessary staff, funding, and statutory authority to perform its duties. The personnel declines at the regulator include the commission itself, which is supposed to have five members but has been left with only Selig. The chairman was questioned about proceeding with major rules as a one-person commission and stated that he cannot slow down the rulemaking process for the sake of the American people. The CFTC is pursuing a preliminary rule process to establish guardrails for US prediction markets, and Selig has also pushed policy initiatives in crypto. Committee Chairman Thompson announced plans to send a letter to the White House, along with Craig, to encourage the prompt filling of commissioner positions with CFTC nominees from both parties.