US Crypto Regulatory Body to Leverage AI for Application Review

The US Commodity Futures Trading Commission, known for its openness to digital assets, is now exploring artificial intelligence to compensate for a significant reduction in its workforce. According to Chairman Mike Selig, in an interview with CoinDesk, AI and automation will play a crucial role in making up for personnel cuts resulting from President Donald Trump's efforts to reduce federal staffing. Selig, who is scheduled to appear at Consensus 2026, emphasized the agency's push to utilize technology for reviewing registration applications and aiding in market surveillance, aiming to become a leading regulator in the US crypto sector. Currently, the CFTC's registration process involves 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 issues for staff, and speed up feedback and rejection processes for incomplete submissions. The agency is also training staff to use Microsoft's Copilot and is developing in-house tools for reviewing swap data and market surveillance, indicating a strong embrace of technology. As the derivatives regulator's chairman for four months, Selig has overseen significant steps into emerging technologies, including crypto and prediction market oversight. A key 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 confidently, knowing they are not inadvertently violating securities laws. The CFTC is also taking action against fraud, manipulation, and insider trading in crypto markets. However, the agency's stance on prediction markets, particularly its claim of exclusive jurisdiction over companies like Kalshi and Polymarket, has been contentious, leading to conflicts with states that have challenged these companies for violating state gaming laws. The CFTC has sued several states to defend its jurisdiction and has joined a Department of Justice case against a US Army soldier accused of using confidential information for prediction-market bets. Selig reaffirmed the agency's commitment to enforcing regulations in prediction markets, emphasizing that it will take action against bad actors and is closely monitoring developments.