US Regulator CFTC to Leverage AI for Crypto Registration Reviews

The US Commodity Futures Trading Commission, known for its openness to digital assets, is now turning to artificial intelligence to compensate for the loss of over a fifth of its workforce, according to Chairman Mike Selig. In an interview with CoinDesk, Selig, who is scheduled to appear at Consensus 2026 in Miami, stated that AI and automation will help offset personnel cuts resulting from President Donald Trump's efforts to reduce federal staffing. The agency, which is poised to become a leading US regulator for the crypto sector, 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 explained that they are developing systems to automate this process, making it more efficient. AI tools can review applications, flag certain issues for staff, and expedite the feedback and rejection process. For instance, AI can identify and reject incomplete or inaccurate submissions, streamlining the process. Selig mentioned that his staff is being trained to use Microsoft's Copilot, and the agency is also creating in-house tools for reviewing swap data and market surveillance purposes. These tools will enable the agency to draw conclusions about specific trades and further embrace technology. Under Selig's leadership, the US derivatives regulator has been actively involved in emerging technologies, including crypto and prediction markets oversight. A significant initiative has been the joint guidance with the Securities and Exchange Commission to establish a taxonomy for digital assets, providing a system of definitions for regulatory jurisdictions. This development is expected to give market participants, software developers, and consumers confidence in engaging with crypto systems without inadvertently violating securities laws. Although the interpretive guidance does not yet carry the full force of permanent policy, it provides clarity on the CFTC's responsibilities and its commitment to policing fraud, manipulation, and insider trading in crypto markets. The agency's stance on prediction markets has been more contentious, with Selig asserting the CFTC's exclusive jurisdiction over these firms, which has led to conflicts with states that have challenged companies like Kalshi, Polymarket, Crypto.com, Coinbase, and Gemini for violating state gaming laws. The CFTC has sued several states, including New York, to defend its jurisdiction. Recently, the agency joined a Department of Justice case against a US Army Special Forces soldier accused of using confidential government information and committing fraud and insider trading through prediction-market bets. Selig emphasized the agency's commitment to enforcing regulations and taking action against bad actors in the markets, stating that market participants should be on notice.