The US Commodity Futures Trading Commission is leveraging artificial intelligence and automation to tackle its expanding oversight duties, according to Chairman Mike Selig's congressional testimony. This development comes as the agency faces a substantial decline in its workforce, with about a quarter of its staff departing since 2025, largely due to President Donald Trump's directive to reduce the federal workforce. However, the CFTC is also being tasked with regulating the rapidly growing cryptocurrency and prediction markets.
Selig emphasized that AI tools, such as Microsoft's Copilot, will be instrumental in surveillance and investigations, and are being integrated into various workflows. When questioned about staffing cuts, Selig asserted that the agency is operating more efficiently and effectively. Committee Chairman Glenn 'GT' Thompson expressed concern about the agency's workload, particularly with the introduction of digital assets and prediction markets, and sought assurance that Selig would request additional qualified staff if needed. Selig confirmed that proper market enforcement is a top priority, although the CFTC's budget request for the next year only includes three additional enforcement staff, leaving the division about 23% short of its 2025 personnel.
The Digital Asset Market Clarity Act, currently being worked on by the Senate, would place the CFTC at the forefront of non-securities crypto trading regulation, covering transactions involving prominent assets like 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 previously argued that the agency required more personnel to oversee crypto and lacked the resources to police the expanding 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 chairman acknowledged 'numerous ongoing investigations' in prediction markets but did not provide specifics.
He emphasized that regulated platforms serve as the first line of defense against insider trading, fraud, and market manipulation, while the CFTC acts as a second line of defense. Selig noted that his agency regularly rejects contracts and is actively reviewing the 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 the 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 indicated that he would move forward with new regulations, including a preliminary rule process for US prediction markets and 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.