US Crypto Regulatory Body to Leverage AI for Application Reviews

The US Commodity Futures Trading Commission, known for its proactive stance on digital assets, is now embracing artificial intelligence to compensate for a significant reduction in its workforce. According to Chairman Mike Selig, the agency is on the path to becoming a leading regulator in the US crypto sector and is leveraging technology to review registration applications and aid in market surveillance. Currently, the CFTC's registration process is manual, but Selig noted that they are 'building out systems to automate that, to make it much more efficient.' AI tools are being utilized to review applications, flag issues for staff, and make the feedback process faster. The agency is also training its staff to use Microsoft's Copilot and developing in-house tools for reviewing swap data and market surveillance. Selig has been at the helm of the derivatives regulator for four months and has taken significant steps in overseeing emerging technologies, including crypto and prediction markets. 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. The chairman emphasized that this development will allow market participants to engage with crypto systems confidently, knowing they are not inadvertently violating securities laws. However, the agency's stance on prediction markets has been contentious, particularly with states challenging companies for allegedly violating gaming laws. Selig has taken a firm stance that the CFTC has exclusive jurisdiction over these firms, leading to legal actions against several states. The CFTC has also been involved in a Department of Justice case against a US Army soldier accused of insider trading in prediction markets. Selig reiterated the agency's commitment to enforcing regulations and taking action against bad actors in the markets, emphasizing that their stance is not merely rhetorical.