The U.S. Commodity Futures Trading Commission is leveraging artificial intelligence and automation to tackle its expanding regulatory responsibilities, as stated by Chairman Mike Selig in his congressional testimony, despite a significant decline in the agency's workforce under the Trump administration. Since 2025, approximately a quarter of the CFTC's staff has departed due to President Trump's demands for a reduced federal workforce, according to agency records. However, the CFTC is also tasked with overseeing the rapidly growing areas of cryptocurrency and prediction markets.
Selig informed lawmakers that 'tools such as 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 the staff decline, Selig stated, 'we are operating more efficiently and effectively.' Committee Chairman Glenn 'GT' Thompson noted, 'we are placing a significant burden on you with digital assets, and we are clearly proceeding with prediction markets,' and sought assurance from Selig that he would request assistance from the panel if the need for additional qualified staff arises. Selig responded, 'absolutely.' He emphasized that proper market enforcement is a 'top priority,' although the CFTC's budget request for the next year only asked for three additional enforcement staff, bringing the total to 108 people, which is still 23% short of the 140 staff members the division had in 2025.
The proposed Digital Asset Market Clarity Act would grant the CFTC 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 asserting its jurisdiction over prediction markets, including firms like 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 monitor 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 markets have drawn scrutiny due to certain trades related to U.S. military actions and government statements, suggesting potential insider trading by individuals with government insights. Selig acknowledged 'numerous ongoing investigations' in prediction markets but did not provide a specific number or details about 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. 'We regularly reject contracts,' Selig noted, adding that his agency has a 'zero tolerance' policy for illicit market activity. 'Anyone engaging in such behavior will face the full force of the law,' he said.
However, Representative Angie Craig argued that 'the agency's workforce is stretched too thin,' considering its role as the primary regulator of two of the fastest-growing and most volatile markets. 'We must provide the CFTC with the necessary staff, funding, and clear 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 by the White House.
Selig was questioned repeatedly about this during the oversight hearing, including whether he would proceed with major rules as a one-person commission. 'We cannot slow down our rulemaking for the sake of the American people,' he said, indicating that he will move forward with new regulations alone.
The CFTC is pursuing a preliminary rule process to establish guidelines for U.S. prediction markets, and Selig has also promoted policy initiatives in crypto. Thompson stated that he and Craig will be sending a letter to the White House to 'encourage them to promptly fill the commissioner positions' with CFTC nominees from both parties.