US Regulator CFTC to Leverage AI for Crypto Registration Reviews

The US Commodity Futures Trading Commission, known for its proactive approach to digital assets, is turning to artificial intelligence to compensate for a significant reduction in its workforce, according to Chairman Mike Selig. In an interview, Selig, who is scheduled to speak at Consensus 2026, mentioned that AI and automation will help offset personnel cuts implemented under the Trump administration's efforts to reduce federal staffing. The agency, poised to become a leading regulator in the US crypto sector, is harnessing technology to review registration applications and support market surveillance. Currently, the CFTC's registration process involves manual document submission, but Selig stated that they are developing systems to automate this process, making it more efficient. AI tools can review applications, flag issues for staff, and expedite the feedback and rejection process. For instance, AI can identify and reject incomplete applications or those with incorrect information. Selig noted that his team is being trained to use Microsoft's Copilot and is also creating in-house tools for reviewing swap data and market surveillance. These tools can help staff draw conclusions about trades. Since taking the helm of the US derivatives regulator four months ago, Selig has been at the forefront of 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. This development allows market participants, developers, and consumers to engage with crypto systems confidently, knowing they are not inadvertently violating securities laws. The CFTC will use this clarity to police fraud, manipulation, and insider trading in crypto markets. However, the agency's stance on prediction markets has been contentious, particularly with states challenging companies like Kalshi and Polymarket for violating state gaming laws. Selig has taken a firm stance that the CFTC has exclusive jurisdiction over these firms, leading to lawsuits against several states. Recently, the CFTC joined a Department of Justice case against a US Army soldier accused of using confidential information to place prediction-market bets. Selig emphasized that the agency is committed to enforcing regulations in prediction markets and will take action against bad actors, underscoring the seriousness with which they view these cases.