The US Commodity Futures Trading Commission is embracing artificial intelligence and automation to navigate its increased responsibilities in overseeing cryptocurrency and prediction markets, according to Chairman Mike Selig's testimony to Congress, despite a significant decline in the agency's workforce under the Trump administration. Approximately a quarter of the CFTC's staff has departed since 2025, due to demands for federal workforce reductions. However, the agency is being tasked with regulating rapidly expanding arenas for cryptocurrency and prediction markets.
Selig emphasized the importance of AI in monitoring and investigating these markets, stating that 'tools like AI will be highly beneficial in surveillance and investigations, and we are integrating them into our workflows.' He also highlighted the use of Microsoft's Copilot AI tool as a productivity aid. When questioned about staffing declines, Selig asserted that the agency is 'operating more efficiently and effectively.' Committee Chairman Glenn 'GT' Thompson noted the significant responsibilities being placed on the CFTC, including digital assets and prediction markets, and sought assurance that Selig would request assistance if the need for additional qualified staff arose.
Selig confirmed this, stating 'absolutely.' He emphasized that proper market enforcement is 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 levels. The Digital Asset Market Clarity Act, currently being developed by the Senate, would position the CFTC as a central authority over 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 experienced rapid 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 crypto markets 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 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 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. The chairman stated that the agency 'regularly rejects contracts' and is 'actively reviewing' the markets, with a 'zero tolerance' policy for illicit activities. Representative Angie Craig, the committee's top Democrat, argued that the agency's workforce is 'stretched too thin,' particularly given its role as the primary regulator of two rapidly growing and volatile markets.
Craig emphasized the need to provide the CFTC with sufficient staff, funding, and statutory authority to perform its duties effectively. The personnel declines at the regulator include the commission itself, which is legally required to have five members, including two from the minority party, but currently only has Selig. The chairman was questioned about proceeding with major rules as a one-person commission and stated that he would not slow down rulemaking, suggesting he will move forward with new regulations alone if necessary.
The CFTC is pursuing a preliminary rule process to establish guardrails for US prediction markets, and Selig has also promoted 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.