US Regulator to Leverage AI for Crypto Registration Reviews

The US Commodity Futures Trading Commission, known for its embrace of digital assets, is now turning to artificial intelligence to offset the impact of significant workforce reductions. Chairman Mike Selig revealed in an interview that the agency is adopting AI and automation to compensate for personnel cuts, part of a broader effort under President Donald Trump's initiative 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 assisting in market surveillance, aiming to become a leading regulator for the crypto sector in the US. Currently, the CFTC's registration process relies heavily on manual document submission, a system the agency is working to automate for greater efficiency. According to Selig, AI tools can review applications, flag issues for staff, and streamline the feedback process, including the rejection of incomplete applications. The agency is training staff to use Microsoft's Copilot and is also developing in-house tools for reviewing swap data and market surveillance purposes, underscoring its commitment to embracing technology. Since taking the helm four months ago, Selig has led the agency into the forefront of regulating emerging technologies, including crypto and prediction markets. A key initiative has been the establishment of a 'taxonomy' for digital assets, achieved through joint guidance with the Securities and Exchange Commission, which provides a system of definitions to clarify how different subsets of crypto fit into various regulatory jurisdictions. This move is seen as crucial for market participants, software developers, and consumers, as it offers clarity and confidence in engaging with crypto systems without inadvertently violating securities laws. However, the agency's foray into prediction markets, involving companies like Kalshi and Polymarket, has been contentious, particularly with states challenging these firms over alleged violations of state gaming laws. Selig has taken a firm stance, asserting the CFTC's exclusive jurisdiction and suing several states, including New York, over this matter. The agency has also been involved in a Department of Justice case against a US Army soldier accused of using confidential information for prediction-market bets, with the CFTC charging him with insider trading. Selig emphasized the agency's commitment to enforcement, stating that it will take action against 'bad actors' in the markets, signaling a serious approach to regulation.