The US Commodity Futures Trading Commission is leveraging artificial intelligence and automation to cope with substantial new regulatory responsibilities, according to Chairman Mike Selig's congressional testimony, despite a significant 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 the rapidly expanding realms of 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 declines, Selig stated, 'we are operating more efficiently and effectively.' Committee Chairman Glenn 'GT' Thompson noted, 'we're placing a significant burden on you with digital assets, and we're clearly proceeding with prediction markets,' and sought assurance from Selig that he would request help if the need for additional qualified staff arose. Selig replied, 'absolutely.' He emphasized that proper market enforcement is a 'top priority,' although the CFTC's budget request for the upcoming year only asked for three additional enforcement staff, bringing the total to 108 people, which is still about 23% short of the 140 staff members in 2025. The Digital Asset Market Clarity Act, currently being worked on by the Senate, would position the CFTC as a central authority over non-securities crypto trading, encompassing transactions in prominent assets like bitcoin and Ethereum's ether.
The agency is also claiming 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 expanding prediction markets. During Selig's tenure, the prediction markets have been marred by 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 insights. Selig acknowledged 'numerous ongoing investigations' in prediction markets but declined to 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 noted, 'and we're actively reviewing the markets,' adding that his agency has a 'zero tolerance' policy for illicit activities.
'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 overstretched,' particularly given 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 statutory authority to perform its duties,' Craig said. The personnel declines at the regulator include the commission itself, which is supposed to have five members, including two minority party commissioners, 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 US 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.