US CFTC Relies on AI to Offset Staffing Cuts Amid Expanding Crypto Oversight

The US Commodity Futures Trading Commission is leveraging artificial intelligence and automation to address significant new responsibilities, according to Chairman Mike Selig's congressional testimony, despite a substantial decline in the agency's workforce under President Donald Trump's administration. About a quarter of the CFTC's staff has departed since 2025, due to Trump's demands for federal workforce reductions, as per agency records. However, the CFTC is also tasked with regulating emerging and rapidly expanding cryptocurrency and prediction markets. Selig emphasized that AI tools will be crucial in surveillance and investigations, citing the widespread use of Microsoft's Copilot AI as a productivity aid. When questioned about staffing declines, Selig asserted that the agency is operating more efficiently. Committee Chairman Glenn 'GT' Thompson expressed concerns about the agency's workload, given the growing demands of digital assets and prediction markets, and sought assurance that Selig would request assistance if needed. Selig confirmed that he would do so. The CFTC chief emphasized that proper market enforcement is a top priority, although the agency's budget request for the next year includes only three additional enforcement staff, leaving the division about 23% short of its 2025 levels. The Digital Asset Market Clarity Act, currently under consideration in the Senate, would grant the CFTC a central role in overseeing non-securities crypto trading, including transactions in major assets like bitcoin and Ethereum. The agency is also asserting its 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, Rostin Behnam, had argued that the agency needed more resources to effectively oversee crypto and prediction markets. During Selig's tenure, prediction markets have faced accusations of insider trading, with some cases addressed by the firms themselves. The chairman acknowledged numerous ongoing investigations in prediction markets but declined to provide details. He emphasized that regulated platforms are the first line of defense against insider trading and market manipulation, while the CFTC serves as a second line of defense. Selig noted that the agency regularly rejects contracts and is actively reviewing new markets, with a 'zero tolerance' policy for illicit activity. Representative Angie Craig, the committee's top Democrat, argued that the agency's workforce is overstretched, particularly given its role as primary regulator of two rapidly growing and volatile markets. Craig emphasized the need for the CFTC to receive adequate staff, funding, and statutory authority to perform its duties. The regulator's personnel declines 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 suggested that he would move forward with new regulations. The CFTC is pursuing a preliminary rule process for US prediction markets, and Selig has also promoted policy initiatives in crypto. 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.