CFTC Relies on AI Amid Staffing Cuts to Oversee Crypto and Prediction Markets

The US Commodity Futures Trading Commission is embracing artificial intelligence and automation to cope with significant new oversight duties, according to Chairman Mike Selig's congressional testimony, despite a substantial decline in the agency's workforce under President Donald Trump's administration. Approximately 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 stated that AI tools will be instrumental in surveillance and investigations, and the agency is integrating them into various workflows. When questioned about staff declines, Selig asserted that the agency is operating more efficiently and effectively. Committee Chairman Glenn 'GT' Thompson expressed concern about the agency's capacity to handle its expanded responsibilities, given the staffing cuts. Selig assured him that he would request assistance if needed. The CFTC is prioritizing enforcement, with a focus on digital assets and prediction markets, despite a budget request that only allocates three additional enforcement staff. The Digital Asset Market Clarity Act, currently being worked on by the Senate, would grant the CFTC a central role in overseeing non-securities crypto trading, including transactions involving bitcoin and Ethereum. The agency is also claiming jurisdiction over prediction markets, such as those operated by Polymarket and Kalshi, which have experienced significant growth. Selig's predecessor, Rostin Behnam, had argued that the agency required more personnel to effectively oversee crypto and prediction markets. During Selig's tenure, the prediction markets have faced accusations of insider trading, with some cases being addressed by the firms themselves. The CFTC is conducting numerous investigations into these markets, although Selig declined to provide specifics. He emphasized that regulated platforms are the primary line of defense against illicit activities, while the CFTC serves as a secondary line of defense. The agency has a 'zero tolerance' policy for market manipulation and insider trading. Representative Angie Craig argued that the agency's workforce is overstretched, particularly given its role as the primary regulator of two rapidly growing and volatile markets. She emphasized the need for the CFTC to receive adequate staffing, funding, and statutory authority to perform its duties effectively. The personnel declines at the regulator include the commission itself, which is supposed to have five members but currently only has Selig. He was questioned about proceeding with major rules as a one-person commission and stated that he would not slow down the rulemaking process. The CFTC is pursuing a preliminary rule process to establish guidelines for US prediction markets, and Selig has also promoted policy initiatives in crypto. Thompson announced that he and Craig would be sending a letter to the White House, urging them to fill the vacant commissioner positions with nominees from both parties.