US Crypto Regulatory Body to Utilize AI for Application Review

The US Commodity Futures Trading Commission, known for its openness to digital assets, is now embracing artificial intelligence to compensate for a significant reduction in its workforce, according to Chairman Mike Selig in an interview. Selig, who is scheduled to appear at Consensus 2026, stated that AI and automation can offset personnel cuts resulting from President Donald Trump's campaign to reduce federal staffing. The agency, which is poised to become a leading US regulator for the crypto sector, is working towards leveraging technology to review registration applications and assist in market surveillance. Currently, the CFTC's registration process relies on manual document submission, but Selig noted that they are developing systems to automate this process, making it more efficient. AI tools can review applications, flag certain issues for staff, and make their jobs easier by providing faster feedback and rejecting incomplete applications. Selig mentioned that his staff is being trained on Microsoft's Copilot and that the agency is also building in-house tools for reviewing swap data and market surveillance purposes. Since taking the helm of the US derivatives regulator four months ago, Selig has initiated a major push into emerging technologies, including oversight of crypto and prediction markets. One significant 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 development is expected to allow market participants to engage with crypto systems with confidence, and the CFTC will take action to police fraud, manipulation, and insider trading in crypto markets. However, the agency's stance on prediction markets has been contentious, with Selig's assertion that the CFTC has exclusive jurisdiction over these firms putting him at odds with states that have challenged companies for violating state gaming laws. The CFTC has sued several states and recently joined a Department of Justice case against a US Army Special Forces soldier accused of insider trading in prediction markets. Selig emphasized that the agency is committed to taking action against bad actors in the markets and will continue to monitor prediction markets closely.