US Crypto Regulatory Body to Leverage AI for Application Review

The US Commodity Futures Trading Commission, known for its forward-thinking approach to digital assets, is now embracing artificial intelligence to compensate for a significant reduction in its workforce. Chairman Mike Selig, who will be attending Consensus 2026 in Miami, explained that AI and automation will help bridge the gap created by personnel cuts under President Donald Trump's initiative to reduce federal staffing. The agency, poised to become a leading regulator for the crypto sector in the US, is working towards utilizing technology to review registration applications and assist in market surveillance. Currently, the CFTC's registration process relies on manual document submission, but Selig stated that they are developing systems to automate this process, making it more efficient. AI tools will be used to review applications, flag issues for staff, and provide faster feedback. The agency is also building in-house tools for reviewing swap data and market surveillance purposes, using technology like Microsoft's Copilot. Selig has been at the helm of the US derivatives regulator for four months and has made significant strides in overseeing emerging technologies, including crypto and prediction markets. One major initiative has been the joint guidance with the Securities and Exchange Commission to establish a 'taxonomy' for digital assets, providing clarity on regulatory jurisdictions. This move is expected to give market participants, software developers, and consumers confidence in engaging with crypto systems without inadvertently violating securities laws. The CFTC is also taking action to police fraud, manipulation, and insider trading in crypto markets. Furthermore, Selig has been involved in a contentious foray into prediction markets, defending the agency's exclusive jurisdiction over companies like Kalshi, Polymarket, Crypto.com, Coinbase, and Gemini. The CFTC has sued several states challenging these companies for violating state gaming laws, particularly in sports betting. Recently, the agency joined a Department of Justice case against a US Army Special Forces soldier accused of using confidential government information for prediction-market bets. Selig emphasized the agency's commitment to taking action against bad actors in the markets, stating that they are serious about enforcement and market participants should be on notice.