CFTC expands AI use for crypto registrations and market surveillance in U.S.

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CFTC expands AI for crypto

Highlights

CFTC Chairman Mike Selig announces automation of crypto registration using AI tools to speed application reviews and offset reduced staffing.
The CFTC and SEC issued joint guidance defining digital asset taxonomy, providing more regulatory clarity for market participants in the crypto sector.
Selig asserts CFTC’s exclusive jurisdiction over prediction markets, emphasizing active monitoring and enforcement actions, including a recent insider trading case linked to Venezuela.

AI rollout supports leaner crypto oversight

As first reported by CoinDesk, CFTC Chairman Mike Selig says the regulator is building systems to automate parts of its registration process, which currently depends on manual document submission. He says AI tools can review applications, identify missing information or inadequate descriptions, speed up staff feedback and screen out filings that are not materially complete.

Selig says the agency is also training staff to use Microsoft's Copilot and developing in-house tools for reviewing swap data and supporting market surveillance. He says those systems already help the regulator draw conclusions about certain trades, part of a broader effort to use automation to offset reduced staffing.

The chairman, who has led the U.S. derivatives regulator for four months, says the agency is embracing technology while expanding its involvement in emerging areas including crypto and prediction markets.

Crypto policy and prediction markets raise the stakes

Selig says one of the CFTC's most significant recent steps is joint guidance with the Securities and Exchange Commission that sets out a taxonomy for digital assets. He says the framework gives market participants, software developers and consumers greater clarity on how different parts of the crypto sector fit within regulatory jurisdictions, even though Congress has not yet passed a new crypto law and the guidance does not yet have the full force of permanent policy.

He says the clearer division of responsibilities helps the CFTC focus on fraud, manipulation and insider trading in crypto markets. That stance reinforces the agency's push to become a leading U.S. regulator for the sector.

Selig's position on prediction markets is proving more contentious because he argues the CFTC has exclusive jurisdiction over firms including Kalshi, Polymarket, Crypto.com, Coinbase and Gemini, despite challenges from states citing gaming laws. He says the agency is actively monitoring the sector and will pursue enforcement against bad actors, including in a recent case linked to alleged insider trading on military action in Venezuela.

Our earlier coverage of lawmakers challenging recent SEC crypto guidance explained how Senators Elizabeth Warren and Chris Van Hollen argued that an interpretive release could exempt broad categories of digital assets from federal securities laws. The report outlined the SEC’s five-part taxonomy for crypto assets and why critics say it may open regulatory gaps and weaken long-standing investor protections as Congress debates market-structure legislation.

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