The U.S. Commodity Futures Trading Commission is leaning toward artificial intelligence and automation as it faces massive new oversight responsibilities, even as his agency’s workforce has shrunk significantly under President Donald Trump’s administration, according to Chairman Mike Selig’s congressional testimony.
Under Trump’s demand to make significant cuts to the federal workforce, about a quarter of the CFTC’s staff is set to leave by 2025, according to agency records. But the CFTC is also being called on to regulate new and rapidly growing areas of cryptocurrency and prediction markets.
“Tools like AI will be very helpful in surveillance and investigations and we’re incorporating it into different workflows,” Selig told lawmakers on the House Agriculture Committee at a Thursday hearing, citing the widespread use of Microsoft’s Copilot AI tool as a productivity aid. When Selig was asked about staffing reductions at his agency, he said, “We are working more efficiently and effectively.”
“We’re putting a lot on your plate with digital assets, and we’re clearly going down this path with prediction markets,” said Glenn “GT” Thompson, chair of the committee. He sought assurances from the CFTC chief that he would seek help from the panel if he found himself “in a situation where you know the need for additional qualified staff arises.”
“Absolutely,” Selig replied.
He stressed that proper enforcement of the markets is his “top priority,” though the CFTC budget request for next year calls for only three more enforcement staffers to make it 108 people – still about 23% less than the division’s 140 in 2025.
The Digital Asset Market Clarity Act, which the Senate continues to work on, would elevate the CFTC to a central role over non-securities crypto trading, including transactions in major assets like Bitcoin. and Ethereum’s Ether (ETH). The agency is also asserting a dominant legal jurisdiction over major companies Polymarket and prediction markets like Kalashi, which are worth millions of dollars a year ago to several billions of dollars now.
Selig’s Democratic predecessor, former Chairman Rostin Behnam, had regularly argued that the agency would need more people to oversee crypto and that it did not have the resources to police the world as the prediction market expanded in depth and into an almost limitless breadth of contract subjects. During Selig’s brief tenure, there have been allegations of insider trading in prediction markets, some of which have been addressed by the companies themselves. But markets have heavily scrutinized some trades around U.S. military actions and government statements that suggest a small number of unidentified traders have made significant money on the right bets, suggesting the possibility of insider trading from people with government insight.
The chairman acknowledged “a number of ongoing investigations” into the prediction markets, although he would not count any numbers or discuss their focus. He said that regulated platforms are the first line of defense against insider trading, fraud and market manipulation in the hundreds of new markets emerging on platforms every day (binary events question), while the CFTC itself is the second line of defense.
“We routinely reject contracts,” Selig said. “We are actively reviewing what is out there,” he said, adding that his agency has a “zero tolerance” policy for illegal market activity.
“Whoever behaves like this will have to face the full force of the law,” he said.
But Representative Angie Craig, the top Democrat on the committee, argued that “the agency’s workforce is woefully understaffed,” especially considering the agency’s role as “the primary regulator of two of the fastest-growing and most volatile markets.”
“We must give the CFTC the staffing, funding and clear statutory authority it needs to do its job,” Craig said.
The personnel decline at the regulator also includes the commission itself, which under law must have five members – including two commissioners from the minority party – but which the White House has left in place as Selig’s lone appointee. The chairman was questioned repeatedly about this during Thursday’s oversight hearing, including whether he would proceed with major regulations as a one-man commission.
“We cannot slow down our rulemaking for the sake of the American people,” he said. He suggested that he move forward alone on the new rules. The CFTC is adopting a preliminary rulemaking process to establish guardrails for US prediction markets, and Selig has also pushed policy initiatives in crypto.
Thompson said he and Craig will send a letter to the White House “encouraging them to immediately fill those commissioner positions” with CFTC nominees from both parties.
Read more: CFTC sues Illinois, Arizona, Connecticut over states’ sports prediction market efforts
UPDATE (April 16, 2022, 18:07 UTC): Adds plan to committee letter to White House on commission vacancies.