The US Commodity Futures Trading Commission is embracing artificial intelligence and automation to address significant new regulatory responsibilities, as stated by Chairman Mike Selig in 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, following President Trump's directive to reduce the federal workforce significantly, according to agency records. However, the CFTC is also tasked with overseeing the rapidly expanding cryptocurrency and prediction markets.
Selig informed lawmakers that 'tools like AI will be highly beneficial in surveillance and investigations, and we are integrating them into our workflows,' citing the widespread use of Microsoft's Copilot AI tool as a productivity aid. When questioned about staff reductions, Selig asserted that the agency is 'operating more efficiently and effectively.' Committee Chairman Glenn 'GT' Thompson noted that the CFTC has a lot on its plate with digital assets and prediction markets, and sought assurance that Selig would request help if the need for additional qualified staff arises. Selig responded affirmatively. He emphasized that proper market enforcement is a top priority, although the CFTC's budget request for the next year includes only three additional enforcement staff, which would still be about 23% short of the 140 personnel the division had in 2025.
The Digital Asset Market Clarity Act, currently being worked on by the Senate, would grant the CFTC a central role in regulating non-securities crypto trading, including transactions involving leading 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, former Chairman Rostin Behnam, had argued that the agency required more personnel to oversee crypto and lacked the resources to police the 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 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 did not provide specifics. 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.
'We regularly reject contracts,' Selig said, adding that the agency has a 'zero tolerance' policy for illicit market activity and that those engaging in such behavior will face the full force of the law. However, 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. 'We must provide the CFTC with the necessary staff, funding, and statutory authority to perform its duties,' Craig said.
The personnel decline at the regulator includes 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 responded 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. Thompson stated that he and Craig will be sending a letter to the White House to encourage the prompt filling of commissioner positions with CFTC nominees from both parties.