The US Commodity Futures Trading Commission is embracing artificial intelligence and automation to navigate its significantly expanded responsibilities in overseeing cryptocurrency and prediction markets, according to Chairman Mike Selig's testimony to Congress, despite facing a substantial decline in its workforce under the Trump administration. Approximately a quarter of the CFTC's staff has departed since 2025, due to President Trump's directives to downsize the federal workforce, as per agency records. However, the CFTC is also tasked with regulating the rapidly growing cryptocurrency and prediction markets.
Selig emphasized the utility of AI in monitoring and conducting investigations, stating that "tools like AI will be extremely helpful in surveillance and bringing investigations, and we are integrating them into our workflows." He highlighted the widespread adoption of Microsoft's Copilot AI tool as a key productivity aid. When questioned about the staff reductions, Selig asserted that the agency is "operating more efficiently and effectively." Committee Chairman Glenn "GT" Thompson noted the substantial workload imposed on the CFTC, particularly with digital assets and prediction markets, and sought assurance that Selig would request additional support if needed. Selig confirmed his commitment to enforcing market regulations as a top priority, although the CFTC's budget request for the upcoming year only includes three additional enforcement staff, which would still leave the division about 23% short of its 2025 personnel count.
The proposed Digital Asset Market Clarity Act would position the CFTC as a central authority over non-securities crypto trading, encompassing transactions in 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 from millions to billions of dollars.
Selig's predecessor, former Chairman Rostin Behnam, had consistently argued that the agency required more personnel to effectively oversee the crypto market and lacked the resources to police the expanding prediction markets. During Selig's tenure, the prediction markets have faced allegations of insider trading, with some instances being addressed by the firms themselves. The markets have drawn intense 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 the prediction markets but declined to 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 the agency regularly rejects contracts and is proactively reviewing the markets, adhering to a "zero tolerance" policy for illicit activities. Representative Angie Craig, the committee's top Democrat, argued that the agency's workforce is overextended, particularly given its role as the primary regulator of two of the fastest-growing and most volatile markets.
Craig stressed the need to provide the CFTC with sufficient staff, funding, and statutory authority to fulfill its responsibilities. The personnel decline at the regulator includes the commission itself, which is legally required to have five members, including two from the minority party, but has been left with only Selig by the White House. Selig was questioned about proceeding with major rules as a one-person commission and stated that he cannot delay rulemaking for the sake of the American people, indicating his intention to move forward with new regulations. The CFTC is currently pursuing a preliminary rulemaking process to establish guidelines for US prediction markets, and Selig has also initiated policy initiatives in the crypto sector.
Thompson announced that he and Craig will be sending a letter to the White House, urging them to promptly fill the vacant commissioner positions with nominees from both parties.